$360,000 Cap For Injury Payouts
The Age
Tuesday September 3, 2002
The Victorian Government will cap personal injury payouts at $360,000 and limit loss-of-income awards to three times average weekly earnings in a bid to rein in insurance premiums.
Premier Steve Bracks yesterday announced the government would also appoint an Insurance Commissioner to monitor premium pricing and limit litigants' capacity to recoup legal costs from a losing opponent.
Legal groups have already attacked the government over the changes, insisting that a cap would limit long-standing legal rights, and claiming that insurance companies have ``completely duped" the government and would benefit directly from capped payouts.
Mr Bracks said the $360,000 general damages cap should translate to ``better outcomes for consumers and businesses" through reduced premiums and would eliminate small and vexatious claims. It follows similar initiatives in New South Wales and Queensland.
``That will be a new cap for payouts in Victoria and I believe (it is) a very important message to send to the insurance industry and to send to others that excessive payments over and above that are not acceptable," he said.
But the Insurance Council of Australia has suggested that the changes, likely to be introduced in parliament next week, are unlikely to reduce premiums because they would not alter the number of claims.
``If the mechanism has limited effect on claims costs, then it's unlikely to have any significant effects on premiums," said the council's southern division group manager, Peter Jamvold.
Apart from the general-damages and loss-of-earnings caps, the changes would limit legal costs recovery for small claims. The recipient of an award under $30,000 would be unable to seek legal costs as of right. In cases where the award is between $30,000 and $50,000, only $2500 in legal costs would be recoverable.
The government also plans to change the way future economic loss and ongoing care costs are calculated. Courts would retain the right to determine the costs of ongoing medical care, but in future those calculations would assume a 5 per cent rate of bank interest, rather than 3 per cent.
The Australian Plaintiff Lawyers Association's Victorian president, Peter Burt, said that would mean lower lump sums for injury victims, because the assumed rate of return would be higher.
``I'm amazed, quite frankly, that the government in Victoria, which was making all sorts of sensible noises about this issue, has been completely duped by the insurance industry," he said.
``There's nothing in this package that enhances the rights of ordinary people."
Law Institute president David Faram said insurance industry claims of increased litigiousness were unfounded, yet were the basis for caps on payouts.
``No one in the insurance industry is prepared to say that insurance premiums are going to come down as a result of this," he said. A maximum payment of $360,000 would not compensate for injuries that left a person wheelchair-bound, physically scarred or mentally impaired.
Mr Bracks said the changes reflected public views. ``When you look in excess of $360,000, you're looking at an amount which I think the community would expect is too high."
The Victorian Employers Chamber of Commerce and Industry welcomed the proposal.
PAID OUT
JUNE, 2002
• Troy Bowron, right, awarded $61,500 after slipping on pork grease. Mr Bowron fell over and broke his arm after his drunk mate, Ross Lucock, strapped pork chops to his feet for a joke.
MAY, 2002
• A Supreme Court jury found the Waverley Council (Sydney) responsible for injuries suffered by Guy Edward Swain, 28, right, who hit his head on a submerged sandbar during a swim between lifesaving flags in 1997. He was awarded $3.75 million.
DECEMBER, 2001
• Lisa Palmer, 26 and paralysed from the mouth down, sued the Evans Shire Council, roadworks contractor Pioneer Road Services and the Roads and Traffic Authority over an accident on a section of road being resealed. She was awarded more than $16 million.
JULY, 2001
• A woman who slipped on a lettuce leaf in a supermarket in Adelaide awarded $95,000 in damages after suing Woolworths for negligence.
APRIL, 2001
• A trainee teacher injured on a school excursion to the snowfields awarded more than $7 million after a judge found the school and teachers failed to take adequate precautions against the hazards of tobogganing.
APRIL, 2001
• A woman who claimed she developed a phobia of powerlines after several live wires fell awarded $560,000 in damages.
© 2002 The Age
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