Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard   

Previous Fragment    Next Fragment
Tuesday, 28 February 1984
Page: 16

Senator COOK —Has the Minister for Social Security seen the Insurance Commissioner's annual report for 1982-83? Is it the case that the Commissioner's report tells us that for 1982-83 the general insurance industry as a whole failed to record a profit and that it continues to amass large underwriting deficits in the compulsory compensation classes of business? Does this mean we can expect another bout of hefty premium increases to shore up this ailing industry? Is this one of the concerns that lies behind the Government's commitment to co-operate with the States in establishing a national compensation scheme?

Senator GRIMES —Yes, I have seen the annual report of the Insurance Commissioner for 1982-83. Like other honourable senators, I would be concerned at a deterioration in the performance of the general insurance industry in this area. Private insurers have in fact accumulated nearly $1,100m in underwriting losses in the past three years and almost half of this loss occurred in 1982-83. Much of the loss has resulted from the compulsory compensation classes of business.

I agree that we can expect another round of workers compensation and, in fact, compulsory third party premium increases as a result. As Senator Cook says, we have all heard this before. This is the same tired story we have grown used to over the years. It is of great concern because the premium increases which will result-as they have resulted in the past-will be at the expense of a further tightening of the labour market because workers compensation costs are a major indirect cost of labour. In fact, after taxation they are the major cost of this type to various employers. This results in higher inflation because at least some part of workers compensation costs are passed on in higher prices and compulsory third party premiums are included in the consumer price index basket of goods which are calculated every three months. There is also obviously some loss of business profitability and competitiveness.

This situation is all the more lamentable when one recognises that, after excluding the State government insurance offices, about two-thirds of workers compensation and all compulsory third party business is now operated for the benefit of little more than a handful of insurance companies-of the order of 10 companies at the last count. The only solution to this would seem to be a co- operative effort from both the States and the Commonwealth Government to establish a more rational compensation system. The very serious alternative to this may in fact be a collapsing around our ears with an increasingly severe restraint on economic activity, which I do not think anyone wants.

I believe, as Senator Cook obviously believes, that we have to look forward to a rational, sensible, sure and economical system of compensation in this country through a national compensation scheme, whether it is done through the Federal Government or with the co-operative effort of the State and Federal governments. I hope that day will come but, like other honourable senators, I hoped that day would come back in 1974 when I was in this place and the idea was first introduced. It seems as though it is a long time coming.