Victims of motor vehicle accidents will be the losers under plans announced by the NSW government to cut benefits under the Compulsory Third Party insurance scheme.
The government is reviewing the entire CTP scheme saying the 'green slip' insurance motorists have to pay when registering their vehicle is getting too expensive. Savings being offered are $50-$75. But under the proposed changes, everybody without separate income protection insurance will be putting their homes, and ability to support their family, at risk every time they get in a car. This is because the Motor Accidents scheme will no longer cover their full wage loss if they have an accident.
Viewed from this perspective, the current CTP scheme is cheap accident insurance when you are on the road.
The government blames legal costs for the rise in green slip costs. That's a convenient and simple explanation for what is a complex issue. And it's wrong. Legal and administrative costs of the scheme have actually fallen over the last five years and the number of disputes has remained unchanged.
A report by the Motor Accident Authority released last week shows that payments to victims have not increased for the past four years and that payments to claimant's legal representatives are about 5% of the premium collected by green slips. Insurance companies' profits from the CTP scheme, on the other hand, have risen to become 19 per cent of premiums (one in five dollars collected). Insurance "super profits" have been projected to exceed $1.5 billion.
The government plans to introduce a new 'no-fault' scheme providing accident victims with "defined benefits" and says this will reduce long and costly disputes and give accident victims faster access to payment. It could have that effect but it will also mean reduced entitlements to accident victims.
"The one thing that is certain under these changes is that defined benefits means reduced benefits for those who are injured in motor vehicle accidents in NSW," said Kasarne Robinson, NSW secretary of the Australian Lawyers Alliance and director at Stacks/Goudkamp law firm.
Benefits for accident victims have already been hit by changes in recent years and 90 per cent of people injured in car accidents already miss out on pain and suffering compensation for their injuries.
No one disputes that the CTP scheme could be more affordable for motorists and fairer for people injured in motor vehicle accidents. But let's have a sensible and transparent debate about the issue.
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