Doctors in Queensland should not have taken effective strike action yesterday nor should ACT doctors have taken leave. For a start, the Queensland Government had already enacted some tort-law changes that would meet some of their concerns and the ACT Government had introduced a guarantee. Also, there is a meeting of Treasurers next month to map out some national changes, so there is a high degree of recognition of the problem.
Much of the difficulty with rising public indemnity premiums has nothing to do with a sudden rise of claims. Premiums have suddenly gone up throughout the industrialised world. The difficulties have occurred because insurance companies were doing well on the investment front for a long time and could therefore subsidise premiums in order to meet competition in the market and to retain or gain market share. Now investment returns have weakened and the companies that caused much of the competition with unsustainable premiums have gone broke, leaving room for big premium increases. There has also been a rise in reinsurance costs after the September 11 attacks in the US, not only because of the events themselves but also the increase in estimates of future risks they caused.
It would be unjust if these events were to lead to extensive tort law changes that reduced compensation to victims unfairly. Those victims who do not get compensation will fall back to public welfare. Moreover, US experience has shown that limiting damages does little to reduce premiums. Premiums in states which have not made changes have remained about the same.
The ACT Government was right to institute the guarantee. The Victorian Government was right to put up a reinsurance scheme for adventure sports. Next month’s ministerial meeting should regard the insurance problem more as a market failure rather than a claims blow-out driven by a litigious society. Governments should look seriously a stepping into the market – not as an insurer of first call, but as a reinsurer for one-off catastrophic claims. After all, it is often government regulation that requires high level of insurance coverage in the first place. A government scheme that picked up claims over a certain high limit would reduce the reinsurance cost without taking away victims’ rights.
Doctors have a point about the statute of limitations and claims by children. The normal period in which a claim for medical negligence must be made is six years from the operation. However, in the case of child it can be six years from when the child was first entitled to sue in his or her own right – at 18 years. It means there is a large tail in medical negligence claims. Good sense would require the parents to sue in the child’s name within six years of the operation or birth. It is unfair to doctors to have to defend actions decades earlier.
The doctors also have a point about dealing with many small claims. It might be unwise to exclude small claims in total because it would throw more people on to the stretched public sector. And it is unfair to make victims cop the consequences of another negligence. However, there would be nothing wrong with capping legal costs.
The question of public liability premiums must be dealt with on many fronts. It must not boil down to just removing victims’ rights – if only for the reason that that will not of itself cause premiums to fall.
In the meantime, doctors should refrain from withdrawing services while governments are offering guarantees and taking active steps to deal with the matter.