INSURANCE REFORM CAMPAIGN – HOW IT WILL AFFECT YOU





			[ HOME ] [ MISSION ] [ REPORT CARD ] [ SEE HOW IT WILL AFFECT YOU ] HOW THE INJURIES VALUE SCALE RIPS OFF CONSUMERS, PROTECTS INSURANCE COMPANIES AND MAKES NO ECONOMIC SENSE Posted August 25, 2004 All the recent ‘reforms’ –impact the hardest on low income earners or those with no income (the young and the elderly) as they (unlike the wealthy) have no independent resources that can be used to recover from the financial and personal hardship that even moderate injuries cause. Low income earners need general damages to help them re-establish themselves after an injury as they have no other resources to fall back on. The scale assumes that moderate injuries are minor. A person that under the current system would be awarded say $50,000 has a significant injury. In most cases the scale will reduce that to $25,000 and the victim still has to pay all their own legal and medical investigation costs. There is no justification for this. The procedural and costs changes in the MAIA and the PIPA already act as a deterrent to the bringing of claims. It is no longer economically viable for injured persons to bring claims for ‘domestic’ type injuries because they must pay all their own legal and medical investigation costs. The centuries' old legal rule that at-fault parties pay the victim's legal costs, has been abolished except where the damages recovered exceeds $50,000. This law hinders access to justice just as much - although by a different means - as was intended by the fictionalised version of Jack Cade in 1450 England. The damages restrictions in the MAIA and CLA already eliminate claims for these ‘domestic’ type injuries - claimants cannot recover for domestic care in most cases - this is of itself a disincentive to the bringing of a claim. The introduction of the general damages scale where the points are simply too low against a background of other major restrictions, the effect of which is yet to be seen, is a "scorched earth" policy that is unnecessary and part of a federal conservative government agenda. The impact of the amendments to the PIPA, MAIA and Civil Liability Act should be given an opportunity to work before adopting a draconian approach to general damages. The points scale is too low - it reduces catastrophic injuries to severe injuries, severe injuries to moderate injuries and moderate injuries to nothing. General damages awards in Queensland are too high. This hashave never been at the same high level they were in other Statesthe case. In fact, the argument by the insurance industry was one that they needed certainty in general damages awards. This can be achieved by the scale but the scale must be fair. The overall scale needs to be increased in 4 key areas: Moderate injuries require an increase in the points at the upper end of the relevant ranges of moderate injuries Severe injuries require an increase in points Catastrophic injuries require an increase in points There needs to be an overlap within the various categories of injuries The PIRS should be abandoned for the following reasons: It is complicated, untested, and has numerous obvious deficiencies, contradictions and demonstrable shortcomings It is designed as a bureaucratic exercise for a no fault system (Comcare) It will be expensive and result in claimants being put to considerable additional expense It is unnecessary as the Courts are quite capable of assessing psychiatric disability There has beenwas insufficient (almost none) public consultation particularly in relation to the PIRS The ‘reforms’ will protect insurance companies from paying out the full cost of injuries that the policy was meant to cover in the first place and for which the premium was paid. ALL THE PROPOSALS DISCUSSED BELOW (AGAINST WHICH INSURANCE REFORM CAMPAIGNED ) HAVE NOW BEEN IMPLEMENTED Posted June 24, 2004 State and Federal Governments have caved in to every demand from big business and insurers. It was a stunning victory by Insurance companies over consumers in a massive campaign that often applied the blowtorch to the community group sector with huge premium hikes. The result is:- insurance company profits have soared most (up to 80%) of consumer injury compensation claims have been eliminated reckless policy holders are given wide exemptions from accountability consumers’ rights have been done away with permanently huge premium hikes remain unchecked victims injured through no fault of their own must in most cases meet expenses and loss of income taxpayers to subsidise reckless behaviour through Medicare, Centrelink payments and Public Hospital treatment of innocent victims. In March, QBE posted an annual profit of $572 million on a wave of premium increases and “no large claims”. Suncorp stunned with a jump in annualised profit to a record $562 million. IAG is also swimming in cash with a 500% profit increase to over $600 million and Promina Insurance announced a $298 million profit. To protest these changes click here and send a protest direct to your MP. WHAT YOU SHOULD KNOW ABOUT THE FEDERAL GOVERNMENT’S PROPOSALS TO RESTRICT CONSUMER INJURY COMPENSATION RIGHTS Posted September 11. 2002 What changes does the Federal Government want to impose? The proposal is to eliminate consumers’ rights to compensation for injuries caused by reckless conduct unless they have suffered an injury equivalent to 15% "of the most extreme case.” This means that most (more than 80%) all injuries caused by reckless conduct will be uncompensated and the persons who cause them will escape accountability. What sort of injuries will be affected? Most (more than 80%) of injuries are out. Take someone with a 21% disability to his or her leg. This equates to a bodily impairment of 8-9%. A person like that cannot get out of a chair, would not be able to do manual work and would have difficulty with even a desk job. That person will get no compensation for their permanent disability - only lost income and medical expenses. There are countless other examples (See below). There will be no differentiation between a manual worker who would be affected worse than an office worker – the wrongdoer who caused the harm can only be held accountable for lost wages and medical expenses. How will people cope if they do not get fair compensation for their injuries? They will simply have to go on a pension and or rely entirely on what benefits are available from the Department of Social Security. Perhaps Sickness Benefits or a Disability Pension. I have heard that there will be changes to children’s rights. Yes. People who maim kids through recklessness will escape all liability unless the child starts a court claim within three years of the injury, the same time period that applies to adults. If their parents don’t act in time for them - because they are busy, ill-informed or even embarrassed - children will have to live with the injury and the consequences of their parents’ inaction. Many injuries that only become worse as a child becomes older will also be left out. Does the report discriminate against any section of the community? Yes. The report discriminates in favour of big business and against consumers throughout. There is however, particular discrimination against the one third of Australians estimated to undergo some form of mental illness who will be denied compensation simply because of their medical condition. And also children. Are other changes proposed? Yes. They also want to exempt in most cases, insurers from having to pay the court, medical investigation, legal and claim costs of the injured person. This means the victim picks up the bill and the law-breaker is home free. What about medical care costs? The proposal is for insurers to pay an injured consumers’ expenses only at public hospital or medicare scheduled fee rates. Medical specialists charge two or three times the medicare rate. This means the consumer has to personally pay the difference for medical treatment caused by someone else’s reckless conduct! Will the proposals avoid delays? No. Insurers are given extra incentive to delay payments because they now won’t have to pay any interest on much of a consumer’s loss. What about loss of income? The law-breaker and their insurer will be exempted from paying an injured consumer’s full wage loss. They will pay only at a maximum rate of up to twice average weekly wages even if the consumer was earning higher. They will also be absolved from paying to the consumer their full loss on foregone employer superannuation contributions. What about my own disability insurance? Insurers will now be able to reduce their payout to an injured consumer by the amount the victim collects under any private sickness, accident or disability policy. This means the insurer gets a windfall at the victim’s expense. Will courts be able to single out intolerable conduct for special penalties? No. The power to award ‘exemplary’ damages against a law-breaker who by some outrageous act maims or even kills, is to be abolished as it is “neither necessary or desirable”. Anything else? Payments for help provided by family members for the assistance they give a victim during recuperation from an injury will be restricted. Haven’t some law changes only just been made? All states have already this year drastically slashed consumer protection laws in response to the insurance crisis. We have not yet seen evidence of how much worse off consumers are as a result. Insurers have kept any figures they have on their resulting improved profitability to themselves. But insurers are pushing for even greater slashing of rights. How will the changes affect me? If you are injured as a result of someone else’s reckless conduct you are very unlikely to receive fair compensation. You will have to rely on the pension. All Australians are also affected just by having these fundamental rights tampered with. Haven’t insurers returned to profitability? Yes. “Several types of insurance will make returns on capital of more than 50% this fiscal year” - Australian Competition and Consumer Commission (ACCC). This statistic shows that the industry has been allowed to lift prices too high. Yet the federal government still supports insurers’ arguments that even more rights should be stripped away from consumers. What proof is there that stripping away consumer rights will reduce insurance premiums? None. Even insurers shy from guaranteeing that reduced premiums will follow the removal of consumer protection legislation. The only sure thing is guaranteed profits for insurance companies. Is there any way I can protect my family and myself from these new proposals? You could try private disability insurance. The premium would depend on your age, income and health. You might need to undergo a medical examination. An average cost would be about $4,000 per year. But be careful to make sure that the policy covers you for what you need. What are the real problems that need to be addressed? There is an atrocious injury rate with an annual cost to the community in excess of $15 billion. What is needed is risk management strategies to prevent injuries. Perhaps tax breaks for injury prevention investment. The priority must be to reduce injuries not take away the rights of ordinary consumers. Will Insurance companies benefit from the changes? Yes. Insurers will be virtually claim-proof but still be able to collect huge premiums. They want consumers to underwrite their previous management mistakes and the excesses of the last decade as seen in HIH and FAI. They will reap spectacular financial windfalls. What about not-for-profit and community groups? Insurance for this sector (most of whom have never made a claim) has been insurers’ most profitable area of business. Yet it was this group to which they applied the blowtorch by refusing insurance or offering insurance at three or four times the previous rate. This was part of a strategy designed to create hysteria among the public and panic legislators into making laws to guarantee insurer profits at the expense of consumers. State governments can facilitate lower premiums with pooled cover for not-for-profit organisations and this is underway in some states. The federal government could also assist by providing tax breaks for the sector – especially if they were to widen the category of organisations who get tax deductibility for donations. How do we stop rising premiums? After a decade of fierce competition – winning customers at almost any cost – premiums had to rise. Before the ‘crisis’ last year, average premiums were below what they were 5 years ago. In the second half of 2002, insurers have returned to high profitability (ACCC) and competition that will halt premium rises and bring them down can now emerge unless insurers collude to prevent it. Should the insurance industry be more closely regulated? Yes. Organisations like APRA must be better resourced to allow closer surveillance to prevent disasters like HIH and FAI and prosecute corporate fraudsters. Transparency in premium calculation and standardised cover to prevent overlapping policies eg between landlord and tenant - is also vital.Who will be the worst affected if the report recommendations are implemented? Elderly people, the disabled, unemployed and others without income will be worst affected because they can effectively recover nothing from the duty-breaker and his or her insurer. What about doctors? The doctor owned insurance company UMP collapsed in April 2002 largely due to the premiums they charged themselves being too low for years. A very small percentage of doctors are responsible for the majority of claims. Bad doctors need to be re-trained or charged higher premiums to reflect the high risk they pose to patients. “Premium rises doctors faced from [July 1] had come about because offshore reinsurers had put up costs, not because of increased litigation in the state.” – Peter Marer, Queensland Doctors Mutual, Courier-Mail 27/06/02 But doesn’t compensation law foster a ‘culture of blame’? No. The law requires that we all must take reasonable care to avoid harm to others. Rather than ‘blame’ it is a question of requiring people to accept ‘responsibility’ for their actions. If people are conscious of their responsibility, they will act to avoid harm to others. This reduces injuries and their cost to the whole community. The proposed changes would relieve wrongdoers of responsibility for the ruin their reckless acts can cause. How urgent is the need to act? The federal government will remove many consumer protection provisions in the Trade Practices Act in upcoming parliamentary sittings and is urging the states to obliterate remaining consumer protection laws immediately. The time to act is now. [ TOP ] [ HOME ] [ MISSION ]