THE ACT Government is seeking views on third-party (personal injury) motor vehicle insurance and has put out a discussion paper.
It says the premium will have to rise by $80 unless something is done.
Of course, the political pressure is to keep the premium low because nearly every voter has to pay it. There is little imperative to keep benefits and damages high because only a few are injured.
The paper says there have been an increase in minor claims (under $25,000) to 75 per cent of claims which take 40 per cent of total payouts.
Perhaps one reason is that since lawyers have been able to advertise you see lots of advertisements along the lines: “”Injured? We can help. Even if you have a minor injury which will mend itself, we can get you some money. Ring Sue, Grabbitt and Runne”.
The paper suggests a threshold, especially for damages for pain and suffering. Fine. People should be able to bear minor injuries, though they should be able to get compensation for lost work-time and medical expenses, which could mostly be done administratively. A good way to enforce the threshold would be to say no legal bills are payable by the injured person if the threshold is not reached. That would discourage lawyers from egging on people with minor injuries to sue.
There is a nasty suggestion in the paper that damages should be capped or that an automatic percentage be deducted from a claim because the common law is too generous. But if you are an innocent road-user and someone seriously injures you, why shouldn’t you get full compensation to put you back (insofar as mere money can do that) where you were before you were injured?
There are some other nasty suggestions purely directly at cutting premiums: that workplace sick pay be called upon and that there be a presumption that relatives and friends will rally round with homecare.
True, there are some defects with the ACT’s present common-law system that need fixing. Lump-sum damages paid months or years after the accident are a disincentive for people to rehabilitate (it is better to look worse in court so you get more money). Also they are a lottery because courts have to estimate a life-expectancy, and the injury could get worse or better after damages are paid. It would be better to have a system of periodic payments for loss of income.
Further, the fault system leaves a lot of injured people in the cold. Rather than cutting premiums they should be raised to cover at least to some extent those people seriously injured in accidents where no-one (or the injured person himself) is at fault. That way the general community (Medicare etc) does not have to pick up the tab for damage done by cars.
The paper is silent as to why the system must apply to same premium to all car-owners. Why not have a scheme of no-claim bonuses and penalties to encourage good driving and to put more of the burden where it belongs: on bad drivers?
All the statistics show that young drivers cause most of the injuries. There is no reason why young drivers with their first car should not pay double or treble the premium of a driver with a 10-year record free of accidents causing injury and free of serious traffic offences. That is the extent of the risk.
If that forces some to delay to young people’s entry to car ownership, good. It can only reduce the number of accidents and make them more careful when they can afford a car and the premium.
There is a danger in all this that the ACT Government will be tempted to shuffle off the losses caused by bad driving on to the injured; the welfare system; relatives of the injured; employers or anywhere else it can get away with it. Then it can announce that premiums have been kept low.
There is a further danger that it will introduce the notorious political “”package” of “”reforms”. This suggests that the job has been done and the problem fixed. In fact, of course, it is nothing of the kind. None of the changes in the “”package” can be individually assessed.
Changes should be made one or two at a time, starting perhaps with an attack on minor injuries and the variable premiums. Damages for the innocent seriously injured should not be cut _ they have a hard enough time as it is.