On 11 March 2016, the Hon Victor Dominello MP, Minister for Innovation and Better Regulation announced a major review of the NSW Motor Accidents CTP scheme, which has been in place for more than 15 years.
The driving forces for the reform include the cost of NSW Green Slip premiums being some of the most expensive in Australia, the often extensive delays in the time taken to resolve claims and for injured people to receive benefits, together with the challenge of a significant increase in exaggerated claims.
In his address Minister Dominello focussed on the four key objectives, which he believes will act to create a fairer and more affordable scheme for road users:-
- Reducing the cost of green slip premiums
CTP Green Slip insurance is compulsory insurance intended to ensure people who sustain injuries in motor vehicle accidents receive the support they need. Without CTP insurance, vehicle owners would be liable to be personally sued for any injuries their vehicle causes to another person. If those responsible were unable to pay, the injured person would be left to bear the cost of the injuries themselves.
Minister Dominello acknowledged the dramatically increasing prices of green slips for NSW motorists being amongst the highest in Australia.
It is important to note that the cost of green slips is partly influenced by the benefits provided by the system. Although NSW may pay higher green slip rates, the benefits available to injured road users are considerably higher in NSW than in most other Australian jurisdictions, including the Lifetime Care and Support Scheme which provides support services to people who have been catastrophically injured in a motor vehicle accident in NSW, regardless of who was a fault.
Reduced green slip premiums are likely to strip away the benefits currently available to those who have suffered injury, by reducing the amount of benefits payable to them, regardless of the severity of the injuries.
- Adjustments to benefits payable to injured road users
Currently, the maximum amount that may be awarded as compensation for non-economic loss or ‘pain and suffering’ is $511,000, provided thresholds are met. Minister Dominello has called for consideration to be given to lowering the current cap, or implementing a graduated system of payment linked to overall impairment, due to a fear that the current scheme generates uncertainty for insurers. Conversely, he has acknowledged that the “trade-off would be less flexibility to cater for individual circumstances.” A decrease in the maximum amount awarded cannot be justified in circumstances where the cap is applicable to all who sustain injuries in a motor vehicle accident, including catastrophically injured people.
Further, tighter caps have been proposed on the amount of economic loss or ‘loss of income’ payable to people who are unable to work as a result of the injuries sustained.
Currently, injured people can claim for the cost of care, including care that may be have been provided free of charge by family and friends. It has been proposed that access to funding for care provided by family and friends be limited or completely removed.
Under the current CTP scheme, an insurer who has admitted liability for a claim is required to reimburse an injured person for their reasonable and necessary medical, treatment and rehabilitation expenses. It has been proposed that injured people be required to pay a standard excess amount before being eligible to claim treatment expenses under the scheme.
- Implementing a fully no-fault defined benefits scheme
Implementing such a scheme would remove the assessment of fault in all cases and provide for defined statutory payments instead of lump sum payments.
Whilst such a system would eliminate dispute over fault and ultimately improve timeliness of payments to injured people it would mean benefits may not be tailored to individual circumstances and could act to significantly reduce compensation awarded, particularly for minor injuries.
A strong focus has also been placed on creating certainty for insurers in their pricing as such a scheme may allow for costs to be more predictable.
- Reducing opportunities for claims fraud and exaggeration
Compensation systems can be prone to fraudulent behaviour, exaggerated or embellishment of claims in order to maximise payments. There is growing concern in relation to the lodgement of fraudulent claims including staged accidents and claims for injuries not caused by the subject accident or gross exaggeration of injuries that were.
The proposed reform will attempt to eliminate fraudulent and exaggerated claims, but it is likely to severely reduce benefits payable to minor injury claimants.
Although, there are issues in the current CTP scheme that need to be addressed, care ought to be taken to ensure that the main reason for our current scheme, to benefit people injured in motor vehicle accidents, is not forgotten.
The underlying purpose of the CTP scheme is to provide people injured as a result of a motor vehicle accident, access to compensation. The changes proposed by the reform steer the CTP scheme from focussing on compensating injured people, to providing the insurance companies with a sense of “certainty”, and reducing green slip premiums, while heavily reducing access to entitlements currently provided for under the CTP scheme as it stands.
If you have been injured in a motor vehicle accident, contact JB & Associates without delay, for obligation-free advice.
At JB & Associates, we take it personally.
Written by Elyse Bonnici
P: (02) 9723 8080