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Wednesday, 13 February 2002
Page: 178


Mr McARTHUR (7:45 PM) —At the opening of the 40th parliament I wish to raise a very lively and difficult community debate about the 300 per cent increase in public liability insurance premiums. Throughout Australia all those small communities are complaining to their local members, be they on the government side or the opposition side, about this new phenomenon. Golf clubs, cricket clubs, local football clubs and local community groups are very concerned that they will no longer be able to operate at the local level because of the public liability premiums and payout. For instance, I have had representations from the Bannockburn Golf Club. They tell me that they had paid a $2,000 premium for public liability and they are now liable for a premium of $9,000. They ask me, `How can the members pay this premium along with their subscriptions?' I have just had a letter in the last 24 hours from the Portarlington Development Association. Mrs Gwenda Wilkinson, the honorary secretary, says in her letter:

Re: public liability insurance—small community groups ... we wonder if a blanket cover of some type would indemnify Office Bearers and the Group to enable it to run events in their own community. ... I am sure that many voluntary groups will disappear to the detriment of small communities.

The question facing this parliament and local community groups is why have premiums increased so dramatically and what can be done to make them more affordable? Have the increases been brought about by a litigious culture, as in the USA where lawyers move in and sue on any issue? Is it the lawyers' `no win, no pay' position that has brought about this increase in premiums? It is interesting to note that in 1998 there were 55,000 claims on public liability policies and two years later there were 88,000 claims. The value of the claims over this period was 10 per cent up. The Australian Prudential Regulation Authority data due later this month is expected to indicate a continuation of this trend. This litigation culture no longer accepts that there are reasonably dangerous sports such as rugby or skydiving. They say, `You will just have to pay the premium'.

Something that has been very close to my heart is the payment by gynaecologists. I understand they pay between $40,000 and $50,000 for public liability insurance for negligence by them that may be proved in a court. This is a very serious matter facing the parliament and the medical profession. Other causes of increased premiums could be that HIH, which has been mentioned in this parliament, was selling insurance at unviable premiums. Eventually this caused that particular insurer to go broke, so premiums had to be increased all of a sudden. This, of course, has impinged on local community groups.

The question in this ongoing debate is what can be done? Can we cap the amounts that courts will award? Say we put a figure on the loss of an arm, a leg or an eye, as in the case of workers compensation. In Victoria there was a proposition to cap the payments and make the workers compensation process work reasonably well. Personally, I would be very concerned about a proposal to abolish common law claims in the courts with a national no-fault scheme funded by the taxpayer. New Zealand has looked at this problem, but of course eventually the taxpayer will take up the liability without a due direct liability to the premium payer and those who bring about the claims. The other problem that has been brought to my attention is the number of years taken before claims have been resolved.

We need an inquiry. We need the insurers and the lawyers to look at this problem. There will be an ongoing debate because people out in the community are very concerned that members of parliament, both state and federal, are doing nothing about this issue and that those people cannot go about their daily lives for fear of being involved in a major insurance claim. They cannot pay these massive premiums. Because of this ongoing problem, to which there appears to be no solution, there is a chance that small community groups, especially in country areas, will close down. I quote from a comment on the final position:

Many stakeholders apart from insurers, governments and lawyers are involved in this issue. In the end, it is for the community to decide what is fair compensation for injury and how much the community can afford to pay.

That is the nub of the issue: can the community afford to pay these massive premiums when the lawyers and the insurance companies are loading the other end of the argument with the massive payouts that the courts continue to award to some of those unfortunate victims? (Time expired)