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Insurance pooling "better reform" than cutting common law rights.



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Senator John Cherry Australian Democrats Community Services Spokesperson

June 16, 2002 MEDIA RELEASE 02/310

Insurance pooling “better reform” than cutting common law rights

The Australian Democrats have supported the Australian Consumer Association’s call to shift the burden of public liability insurance reforms from the legal system to the insurance system.

Democrats Community Services spokesperson, Senator John Cherry, also welcomed the Insurance Council’s announcement today of new pooling arrangements for the not-for-profit sector, but expressed disappointment that the arrangements stopped short of a specialist charity insurance pool.

“A fair deal for charities and sporting clubs will require root and branch reform of insurance arrangement, and so far only the Victorian Government has had the intestinal fortitude to do so,” Senator Cherry said.

“The insurance arrangements under the Victorian Government’s new Our Community insurance pool will offer premiums as low as $326 for charities, compared to the minimum of $1000 under the Insurance Council arrangements announced today.

“A minimum $1000 premium will represent a large increase in premiums for many charities, even though research by the ACCC revealed that the community sector was one of the most profitable sector of public liability insurance for the companies.

“The ACA and the ACCC have both cast doubt on whether the common law reforms being trumpeted by the NSW and Queensland Governments will reduce premiums. Indeed, analysis of US experience suggests that premiums won’t go down, but that insurance industry profits will go up.

“What is needed is root and branch reform of insurance arrangements, with greater transparency of risk pricing to ensure that premiums truly match risk.

“And, we need to recognise the massive market failure that has seen such huge increases in the premiums paid by charities, even though the claims history of the sector showed more than 94% were not making claims and the insurance industry was making a profit out of the sector.

“The Insurance Council has made a start on that process, but more pressure from governments is needed to ensure that insurers start offering insurance products to charities and small businesses at a fair and justifiable price,” Senator Cherry concluded.

For further information: Pam Hose 0408 752 750 or John Cherry 0408 752 750