Canberra injury victims face uncertain times from 1 February

Posted on 6 February, 2020

This month, everything changes in terms of what happens if you are involved in a road accident, with reforms to the ACT’s Compulsory Third-Party Insurance scheme.

The ACT’s Compulsory Third-Party Insurance scheme faces dramatic changes that all road users need to be aware of as new legislation winds back personal injury benefits and attempts to restrict their rights to legal representation.

Victims will need to directly negotiate their own compensation packages with insurance companies against much tougher definitions of injury and impairment.

More importantly, they may no longer be entitled to adequate financial support designed to get them back on their feet, according to personal injury expert and Maliganis Edwards Johnson Partner, James Treloar.

The new legislation has alarmed both the legal profession and the unions who have argued that it significantly reduces rights to fair compensation and access to support when people need it most.

James says that despite a hard-fought campaign to preserve the rights of innocent road users, the ACT Government pushed through changes in the face of overwhelming opposition.

In most cases, road accident victims will need to negotiate directly with insurers, as new cost provisions effectively restrict lawyers from representing victims in the majority of cases.

James Treloar.

James says that these change strike at the heart of fairness for persons injured in an accident through no fault of their own.

“Under the changes that apply to motor accidents occurring on or after 1 February 2020, you are going to have to go into bat for yourself against the insurance company, apply complicated formulas for determining compensation, and then argue your case over many years.”

“In my entire career, I’ve never encountered a situation where a claimant, who has dealt directly with an insurance company, has received an initial offer of settlement that I’ve considered fair and reasonable taking into account all the circumstances”.

“The Government says, ‘there are strict requirements for insurers to inform claimants about this’. Well, that might be true in theory, but those of us with experience in this area know that the practical reality of the situation is often far from what is proposed on paper. The proper and efficient running of the system requires equality between the parties.  Under the new system, there is inequality as insurers with deep pockets and experience enjoy a significant strategic advantage.”

James says the Government’s own modelling suggests about 90 per cent of innocent road users who are injured will miss out on what they would have received under the old system.

“They will get little, if anything, for pain and suffering, and while they may get some out-of-pocket expenses and wages paid, that is only expenses and loss that the insurer deems reasonable, and then only for a set period of time. After that they’re on their own and will have to fall back, presumably, on the public health system.’’

James says the big winners are insurers, who will now be able to dictate the terms and conditions of compensation claims and are likely to increase their business because people are more inclined to take out further insurance—such as income protection insurance—in order to plug the gaps in the new system.

“This is where the boon is for the insurance companies, and why they fought so hard to push these changes through – they get to write another policy, on their own terms, to cover clients who are not fully protected under the new system.”

While the ACT Government has argued that the new system will significantly reduce premiums, James says this is debatable.

“Initially the changes were touted to save Canberrans as much as $171 per annum. The most recent Government modelling shows these forecasts have been slashed to as little as $14.”

James strongly doubts the members of the CTP citizen’s jury would have approved the model pushed by the Government had they known the fine print, the effect these changes would ultimately have on Canberrans, and what would be forsaken for such a modest drop in premiums.

He notes that in New South Wales, where there had been a similar wind-back of protections following a reduction of personal injury benefits introduced across the state in 2017, insurance companies had made approximately $2.5 billion in profits in less than two years.

“According to the State Insurance Regulatory Authority, in the last year alone, insurers had collected around $2.8 billion in premiums, of which only approximately $227 million had been paid in compensation payments.”

James can see no reason why Canberrans can’t expect a similar outcome in the ACT.

While the new ACT provisions generally restrict road accident victims from engaging lawyers, James says firms such as MEJ will continue to provide advice on the process and will fight to ensure their rights are protected.

“Despite the unfair and unjust changes introduced under the new scheme, MEJ remains committed to serving Canberrans injured in motor vehicle accidents.  We still firmly believe people should consult a specialist lawyer to understand their rights and to ensure they receive proper compensation.”

This is a sponsored post from Maliganis Edwards Johnson. You can read our Sponsored Post Policy here.