This week’s federal-state conference on the crisis over personal-liability insurance premiums came up with solutions that defied the facts, defied logic and defied morality. It was a classic of blaming the victim.
The obvious long-term solution was not even talked about – campaigns to make Australia a safer place in which to work and play.
The solutions of capping damages and changing negligence law will put the burden on the innocent injured, while letting the insurance industry off scot free.
Figures taken from the Australian Prudential Regulatory Authority quoted in this column four weeks ago showed the hollowness of the insurance industry’s claim that there has been a dramatic rise in the number and cost of claims, either absolutely or per policy. The value of claims paid out last financial year, the number of outstanding claims, the estimated cost of future claims all fell. But reinsurance costs rose as did premium income. It seems the industry’s huge and sudden increase in premiums is a catch-up of profits lost in previous years when companies like HIH and FAI foolishly lowered premiums to an unsustainable level to gain market share.
There is no evidence of increasing litigiousness or court generosity in the past few years to warrant the increases in premiums. If anything, the courts have got tougher on people claiming compensation. The High Court in Ghantous’s case and the NSW Court of Appeal in Lettice’s case have made it plain the days of the easy pay-out are over, if they were ever there in the first place. These cases say people have to take responsibility for their own safety when walking on footpaths or using bridges. They cannot expect bowling green surfaces, unreasonably high protective fencing or multi-lingual warning signs.
But if someone negligently injures you, you should get compensation for the things you have lost – income and capacity to earn it; loss of the amenities of life; medical costs and the like.
A knee-jerk reaction to change the common-law of negligence now would unfair and foolish. By all means move to periodic rather than lump-sum damages. But that will result in higher pay-outs because at present people are under-compensated when they get lump sums. By all means have a welfare safety net for those injured by accident or otherwise not through the fault of others.
But the fundamental principle of negligence law is as good now as it was when first expounded in 1932. Before then you could only sue for negligence if you fitted into certain classes of people: occupiers, contractors, lessors, buyers, invitees and so on. Then in the case of Donoghue v Stevenson, Lord Atkin generalised the rule. It was a case about a woman who drank ginger beer from a bottle in which there was a decaying snail. Critically, she did not buy the bottle, so had no rights in contract. The bottle was bought by someone else and given to her.
Lord Atkin said, “”The [Christian] rule that you are to love your neighbour becomes in law, you must not injure your neighbour; and the lawyer’s question, Who is my neighbour? Receives a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who, then, in law is my neighbour? The answer seems to be – persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected.”
There is a legal duty to look out for others. It is narrower than the moral duty, but is obviously a subset of it.
If we tamper with this duty, by watering down the law of negligence, we will make for a more brutal society – a society where the duty to care for others is lessened. In short a more selfish society and a less responsible society.
Yes we have a responsibility to look after ourselves, which the law upholds in refusing damages where people do silly things to themselves. But let’s not let a blip in insurance premiums underpin an essential legal duty to look out for others and to be liable to make good a damage we do when we fail to look out for others.
That is where we should direct our attention: into campaigns to educate people to take more care of others and themselves; to behave more safely and to be more safety conscious.