Footnotes

Introduction

[1]        The media reports are too numerous to cite here, but see for example: editorial, Australian Financial Review, 17 February 2001; Tom Morton, ‘Risky Business’, Age, 17 February 2001; Paul Heinrichs, ‘That’s no playground, it’s a legal minefield’, Sunday Age, 18 February 2001; Diana Bagnall, ‘The Blame Game’, Bulletin, 20 March, vol. 119, p. 26.

[2]        Parliament of New South Wales, Report of the Public Bodies Review Committee, Public Liability Issues Facing Local Councils, November 2000, p. 7.

[3]        The company was placed into provisional liquidation in March 2001.

[4]        See ‘HIH collapse puts charities, legal aid under pressure’, Sydney Morning Herald, 25 April 2001; John Breusch, ‘HIH leaves local councils in the lurch’, Australian Financial Review, 30 April 2001; ‘Disaster, Why Every Business Will be Hurt by HIH’, Australian Financial Review, 12 May 2001.

[5]        See for example, Trudy Harris, Andrew White, ‘Insurance premiums to rocket’, Weekend Australian, 19 May 2001; Sharon Kemp, ‘Insurer’s failure triggers big jump in premiums’, Age, 29 May 2001; Anne Lampe, ‘The rise and rise of insurance premiums,, Sydney Morning Herald, 29 May 2001.

[6]        The articles are too numerous to cite here, but see for example: Madeleine Milford, ‘Huge liability rises hit Tassie’, Mercury, 9 July 2001; Richard Baker, ‘Insurance costs threat to adventure tourism’, Age, 30 July 2001; Michael McGuire, ‘Insurance crisis hits grassroots’, Australian, 12 October 2001; Adrian Rollins, ‘Insurance rise hits adventure tourism’, Age, 29 October 2001; Geesche Jacobsen, ‘Clubs, charities crippled as premiums soar’, Sydney Morning Herald, 31 October 2001; James Wakelin, ‘Huge rise in NT insurance costs’, Northern Territory News, 22 November 2001.

[7]        Jacquie Hayes, ‘Counting the cost of terror’, Weekend Australian, 29 September 2001.

[8]        Allan Dick, ‘liability wipeout’, The Land, 13 December 2001; Claire O’Rourke and Stephanie Peating, ‘Insurance costs crippling us, say sport groups’, Sydney Morning Herald, 19 December 2001.

[9]        Julie Robotham, ‘Top rural doctors resign as indemnity crisis grows’, Sydney Morning Herald, 18 January 2001; Leah De Forest, ‘Doctors warn of crisis as Govt Steps in’, Canberra Times, 20 January 2001; Annie White, ‘Crisis! What crisis?’, Australian Doctor, 20 April 2001, p. 31; Leah De Forest, ‘Home-birth midwives lose insurance’, Canberra Times, 10 July 2001.

[10]      Press Release, C3/02, Senator the Hon Helen Coonan, Minister for Revenue and the Assistant Treasurer, ‘Commonwealth proposes meeting on public liability insurance’, 3 February 2002.

[11]      For example see Media Release, Senator John Cherry, Australian Democrats, Community Services Spokesman, ‘Senate set to inquire into public liability insurance’, 19 March 2002; Australian, 19 March 2002, Herald Sun, 19 March 2002; Canberra Times, 19 March 2002.

Chapter 1

[1]        Insurance Council of Australia, Liability losses underline need for reform, media release 27 August 2002.

[2]        Submission 26, NSW Golf Association Ltd, p. 1.

[3]        Submission 9, Maclean Shire Council, p. 1.

[4]        Submission 23, Local Government and Shires Association of NSW, p. 23.

[5]        Submission 40, NSW Department of Sport and Recreation, appendix.

[6]        Submission 23, Local Government and Shires Association of NSW, p. 10.

[7]        Submission 23, Local Government and Shires Association of NSW, p. 8.

[8]        Submission 38, Country Womens Association of Victoria, p. 1.

[9]        Standing Committee on Recreation and Sport, Review of Australian Sports Insurance—summary of a report prepared for the Sport and Recreation Ministers’ Council, March 2002.

[10]      Submission 44, Sport Industry Australia, p. 2.

[11]      Queensland Government, Report of Liability Insurance Taskforce, February 2002, p. 12.

[12]      Submission 18, Surf Life Saving Australia Ltd, p. 1.

[13]      Submission 37, Soccer Australia, p. 1.

[14]      Submission 43, Australian Swimming Inc, p. 2.

[15]      Submission 100, Australian Cricket Board, p. 2.

[16]      Submission 13, Country Womens Association of NSW, p. 2.

[17]      Submission 47, Queensland Outdoor Recreation Federation, p. 1.

[18]      Queensland Government, Report of  Liability Insurance Taskforce, February 2002, p. 16.

[19]      Submission 157, Australian Hotels Association, p. 5.

[20]      Queensland Government, Report of Liability Insurance Taskforce, February 2002, p. 17.

[21]      Queensland Government, Report of Liability Insurance Taskforce, February 2002, p. 17.

[22]      Submission 75, Australian Horse Industry Council, p. 3.

[23]      Submission 113, Council of Small Business Organisations of Australia, p. 2.

[24]      Submission 13, Country Womens Association of NSW, p. 3.

[25]      Submission 13, Country Womens Association of NSW, p. 4.

[26]      Some of these are listed under the aegis of submission 55, Australian Council of Professions.

[27]      Submission 55, Australian Council of Professions, pp. 4, 9ff.

[28]      Submission 28, Association of Consulting Surveyors New South Wales Inc, p. 2.

[29]      Submission 122, Australian Property Institute, p. 2.

[30]      Submission 48, Association of Professional Engineers, Scientists and Managers, Australia and others, p. 4.

[31]      Submission 54, The Association of Consulting Engineers Australia, pp. 3-4. Similarly submission 108, Department of Industry, Tourism and Resources, p. 8: ‘...representations from industry organisations representing professional services firms in the construction industry, who believe that the increase in professional indemnity premiums and excesses for these firms is a result of the transfer of risk to these firms, including from public sector clients.’

[32]      Submission 125, CPA Australia, pp. 2-4.

[33]      Submission 94, Financial Planning Association of Australia Ltd, pp. 8-10.

[34]      Submission 91, Real Estate Institute of Australia, p. 3.

[35]      Submission 81, Institution of Engineers, Australia, p. 2.

[36]      Submission 55, Australian Council of Professions, p. 8.

[37]      Submission 111, Australian Medical Association, p. 1; Submission 52, Doctors Reform Society, p. 2.

[38]      Submission 16, Australian and New Zealand College of Anaesthetists, p. 2.

[39]      Submission 111, Australian Medical Association, p. 1; Submission 52, Doctors Reform Society, p. 2.

[40]      Dr J. Campbell (Royal Australian and New Zealand College of Obstetricians and Gynaecologists), Committee Hansard, 10 July 2002, p. 190.

[41]      Submission 70, Australian Nursing Federation, p. 1.

[42]      Submission 102, Royal College of Nursing, p. 102.

[43]      Submission 117, Australian College of Midwives.

[44]      Submission 59, ACROD Ltd, p. 3.

[45]      Submission 59, ACROD Ltd, p. 3.

[46]      Submission 59, ACROD Ltd, p. 4.

[47]      Submission 108, Department of Industry, Tourism and Resources, p. 7.

[48]      Submission 125, CPA Australia, p. 3.

[49]      Submission 106, National Council of Independent Schools’ Associations, p. 1.

[50]      Submission 49, Australian Industry Group, p. 1.

[51]      Queensland Government, Report of  Liability Insurance Taskforce, February 2002, p. 10.

[52]      Submission 90, Australian Chamber of Commerce and Industry, pp. 3-4.

[53]      Trowbridge Consulting, Public Liability Insurance—analysis for meeting of ministers 27 March 2002, March 2002, pp. 26-7.

[54]      ISC/APRA data quoted in ACCC, Insurance Industry Market Pricing Review, March 2002, appendix C. Net claims expense ($million), year to 12/6/1993: public & product liability $283.118, professional indemnity $175.568, total $458.686. Year to 12/6/2001: public & product liability $582.728, professional indemnity $279.549, total $862.277.

[55]      Trowbridge Consulting, Public Liability Insurance—analysis for meeting of ministers 27 March 2002, March 2002, p. 16. Insurance Statistics Australia is a non-profit company owned by a number of insurance companies. It collects data for the benefit of members. It covers 22 per cent of the market.

[56]      Trowbridge Consulting, Public Liability Insurance—analysis for meeting of ministers 27 March 2002, March 2002, p. 33.

[57]      Trowbridge Consulting, Public Liability Insurance—analysis for meeting of ministers 27 March 2002, March 2002, p. 28.

[58]      Submission 94, Financial Planning Association of Australia Ltd, p. 3.

[59]      Submission 23, Local Government and Shire Association of NSW, p. 5. The Australian Rugby League Ltd, Submission 82, p. 2 stated, ‘No competition from other underwriters. When only one insurer is prepared to take on the risk our client has to pay the premium charged.’

[60]      Submission 24, Association of Independent Schools of Victoria Inc., pp. 4-5.

[61]      Submission 54, The Association of Consulting Engineers Australia, p. 3.

[62]      Submission 47, Queensland Outdoor Recreation Federation, p. 1. The Queensland Government, Report of  Liability Insurance Taskforce, February 2002, p. 14, stated ‘Of the three companies previously involved in underwriting outdoor recreation operations, there remains one in the market at present... there is a reluctance to insure, and in some instances even quote on the provision of policies, for some perceived “high risk” activities.’

[63]      Submission 75, Australian Horse Industry Council, p. 3; Similarly submission 6, Equestrian Federation of Australia, p. 1; submission 19, Riding for the Disabled Association of Australia Inc., p. 2.

[64]      Submission 147, Fire Protection Association Australia & Fire Contractors Federation, p. 6.

[65]      Submission 94, Financial Planning Association of Australia Ltd, p. 10.

[66]      Mr D. West (Royal and SunAlliance), Committee Hansard, 9 August 2002, p. 362.

[67]      Dr D. Roberts (Australian Prudential Regulation Authority), Committee Hansard, 9 July 2002, p. 133.

[68]      Committee Hansard, 8 August 2002, p. 269.

[69]      Mr R. Jones (Insurance Council of Australia), Committee Hansard 8 July 2002, p. 57.

[70]      Submission 100, Australian Cricket Board, p. 2.

[71]      Submission 71, Our Community, p. 3.

[72]      Submission 142, The Australian Institute of Quantity Surveyors.

[73]      Submission 55, Australian Council of Professions, p. 12.

[74]      Submission 17, The South Australian Country Women’s Association Inc., p. 2.

[75]      Mr R. Drummond (Insurance Council of Australia), Committee Hansard 8 July 2002, p. 49.

[76]      Dr D. Roberts (Australian Prudential Regulation Authority), Committee Hansard, 9 July 2002, pp. 130,133.

[77]      Dr D. Roberts (APRA), Committee Hansard, 9 July 2002, p. 137: for the year to June 2001 the loss ratio for professional indemnity business was 158.7; for public liability 171.3. Trowbridge Consulting, Public Liability Insurance—analysis for meeting of ministers 27 March 2002, March 2002, pp. 26-7,33.

[78]      Mr D. West (Royal and SunAlliance), Committee Hansard, 9 August 2002, p. 355.

[79]      Trowbridge Consulting, Public Liability Insurance—analysis for meeting of ministers 27 March 2002, March 2002, pp. 40-41.

[80]      For example, the Australian Cricket Board noted in paragraph 1.53.

[81]      Mr D. West (Royal and SunAlliance), Committee Hansard, 9 August 2002, p. 362.

[82]      Trowbridge Consulting, Public Liability Insurance—practical proposals for reform, 30 May 2002, p. 42.

[83]      Submission 56, Wollongong City Council, pp. 10-12.

Chapter 2

[1]        Trowbridge Consulting, Public Liability Insurance—analysis for meeting of ministers 27 March 2002, March 2002, p. 11.

[2]        Australian Competition and Consumer Commission, Insurance Industry Market Pricing Review—Release Draft, March 2002, p. 67.

[3]        Mr R. Jones (Insurance Council of Australia), Committee Hansard,, 8 July 2002, p. 48.

[4]        Submission 127, Australian Prudential Regulation Authority, p. 2.

[5]        Trowbridge Consulting, Public Liability Insurance—analysis for meeting of ministers 27 March 2002, March 2002, p. 26.

[6]        Trowbridge Consulting, Public Liability Insurance—analysis for meeting of ministers 27 March 2002, March 2002, p. 38.

[7]        JPMorgan, 2002 Interim Insurance Survey, February 2002, p. 3.

[8]        Trowbridge Consulting, Public Liability Insurance—analysis for meeting of ministers 27 March 2002, March 2002, p. 38.

[9]        See Background Paper no. 1, A Profile of the General Insurance Industry, prepared by the Insurance Council of Australia for the HIH Commission, November 2001, p. 6.

[10]      For most of the ideas in this section the Committee acknowledges submission 152, Department of the Treasury; Trowbridge Consulting, Public Liability Insurance—analysis for meeting of ministers 27 March 2002, March 2002, pp. 9ff; JPMorgan, 2002 Interim Insurance Survey, February 2002.

[11]      By contrast, the domestic classes—householders and domestic motor—have shown relatively stable premiums and profit margins over the last nine years. JPMorgan, 2002 Interim Insurance Survey, February 2002, p. 4.

[12]      Mr R. Jones (Insurance Council of Australia), Committee Hansard, 8 July 2002, pp. 45-6.

[13]      This a matter of the mathematics of probability. The greater the number of events, the more accurately the outcome of a group of events can be predicted. In one trial of tossing a coin, we cannot predict the outcome. In 1,000 trials of tossing a coin, we can predict with confidence that the outcome will be heads close to 500 times.

[14]      Submission 143, Insurance Australia Group, pp. 2-3.

[15]      Mr R. Jones (Insurance Council of Australia), Committee Hansard, 8 July 2002, p. 47.

[16]      JPMorgan, 2002 Interim Insurance Survey, February 2002, p. 5.

[17]      Trowbridge Consulting, Public Liability Insurance—analysis for meeting of ministers 27 March 2002, March 2002, p. 37.

[18]      Submission 143, Insurance Australia Group, p. 3.

[19]      Mr D. West (Royal and SunAlliance), Committee Hansard, 9 July 2002, p. 355-6.

[20]      Mr R. Jones (Insurance Council of Australia), Committee Hansard, 8 July 2002, p. 47.

[21]      Submission 143, Insurance Australia Group, p. 3.

[22]      APRA, Australia’s World Class Insurance Reforms Come into Effect, media release 28 June 2002.

[23]      Submission 67, Insurance Council of Australia, attachment 1, Public Liability Submission to Ministerial Forum, March 2002p. 5.

[24]      Mr A. Abbott (Law Council of Australia), Committee Hansard, 8 August 2002, p. 269.

[25]      Trowbridge Consulting, Public Liability Insurance—analysis for meeting of ministers 27 March 2002, March 2002, p. 11.

[26]      For example, submission 23, Local Government and Shires Association of NSW, p. 5.

[27]      Submission 127, Australian Prudential Regulation Authority, p. 2.

[28]      Australian Competition and Consumer Commission, Insurance Industry Market Pricing Review—Release Draft, March 2002, pp. 59ff.

[29]      For example, submission 123, National Farmers Federation, p. 7.

[30]      For example, submission 90, Australian Chamber of Commerce and Industry, p. 6; submission 115, Australian Business Ltd, p. 5.

[31]      Hon. M. Egan MLC, New South Wales Budget Speech, 4 June 2002, p. 21; Hon. T. Mackenroth MP, Appropriation Bill 2002 [Queensland], Second Reading Speech, 18 June 2002, p. 17; Hon. D. Crean MLC, 2002-2003 Budget Speech [Tasmania], 23 May 2002, p. 9. Hon. T. Quinlan, Deputy Chief Minister of the ACT, media release 15 July 2002.

[32]      Dr D. Roberts (Australian Prudential Regulation Authority), Committee Hansard,, 9 July 2002, pp. 132-3.

Chapter 3

[1]        Submission 61, p.15. The Association also referred to the Australian Productivity Commission, Annual Report 2000-2001, which showed that, rather than civil litigation increasing, there had been an average annual decrease of 4% between 1996-97 and 1999-2000.

[2]        Mr Robert Davis, Committee Hansard, 9 July 2002, p. 149.

[3]        Trowbridge Consulting, Public Liability Insurance, analysis for meeting of ministers 27 March 2002, March 2002, p. 13.

[4]        Trowbridge Consulting, Public Liability Insurance, analysis for meeting of ministers 27 March 2002, March 2002, p. 14.

[5]        Submission 81, Institute of Engineers Australia, p. 6.

[6]        Submission 106, National Council of Independent Schools’ Associations, pp. 5-6.

[7]        Submission 147, p. 7.

[8]        Trowbridge Consulting, Public Liability Insurance, Practical Proposals for Reform, May 2002, p. 55.

[9]        Trowbridge Consulting, Public Liability Insurance, Practical Proposals for Reform, May 2002, p. 59.

[10]      The Report by Mr Dave Finnis for the Insurance Council of Australia asserts that ‘it is clear that the key drivers of the growth of public liability insurance costs are an influx of smaller claims at the $20,000 to $50,000 level, combined with a doubling in the proportion of the most serious claims—i.e. those settled for more than $500,000’ (Review of the Cumpston Sarjeant Report to the Law Council of Australia, Draft III, p. 2 of 9,
http://www.ica.com.au/hotissues/Finnisreport.asp (July 2002); Mr Gregory Nance, Chief Executive, Surf Life Saving Australia, Committee Hansard, 8 July 2002, p. 1; Mr David Clark, Legal Officer, Local Government and Shires Association of NSW, Committee Hansard, 8 July 2002, p. 16; submission 47, Queensland Outdoor Recreation Federation, p. 7.

[11]      For example, submission 20, Agricultural Societies Council of NSW Inc.

[12]      Submission 5, p. 1.

[13]      Submission 61, p. 19.

[14]      For example, s.66(1) of the Personal Injuries Proceedings Act 2002 (Queensland) prohibits advertising personal injury services on a ‘no win, no fee’ or other speculative basis; a similar restriction is provided for in clause 18 of the Civil Liability Bill, 2002 (WA) and clause 68B of the Legal Profession Amendment (Advertising) Regulation 2002 (NSW).

[15]      For example, submission 18, Surf Life Saving Australia Limited, p. 2.

[16]      Committee Hansard, 9 August 2002, p. 404.

[17]      Civil Liability Act 2002 (NSW), Schedule 2 Amendment of Acts, 2.2 Legal Profession Act 1987 No 109.

[18]      Mr D. Clark (Local Government and Shires Association of New South Wales), Committee Hansard, 8 July 2002, p. 14; submission 47, Queensland Outdoor Recreation Federation, p. 7.

[19]      Personal Injuries Proceedings Act 2002 (Qld).

[20]      Mr P. Cundall (Property Council of Australia), Committee Hansard, 9 August 2002, p. 398.

[21]      Submission 20, Agricultural Societies Council of NSW Inc, p. 2.

[22]      Trowbridge Consulting, Public Liability Insurance, Practical Proposals for Reform, May 2002, p. iv.

[23]      Edited text of speech by Chief Justice Spigelman, to the Judicial Conference of Australia, 27 April 2002, in Trowbridge Consulting, Public Liability Insurance, Practical Proposals for Reform, May 2002, p. 114.

[24]      Submission 132, Law Council of Australia, pp. 26-27.

[25]      Submission 132, Law Council of Australia, attachment, letter to Treasury 20 March 2002.

[26]      Committee Hansard, 8 August 2002, p. 274.

[27]      Review of the Law of Negligence: Final Report, September 2002, pp. 27, 44.

[28]      Review of the Law of Negligence: Final Report, September 2002, for example, recommendations 4—7, 14–15, 28–32, pp. 4–14.

[29]      Civil Liability Act 2002 (NSW); Personal Injuries Proceedings Act 2002 (Qld); Wrongs (Liability and Damages for Personal Injury) Amendment Act 2002 (SA); Civil Liability Bill 2002 (WA); Wrongs and Other Acts (Public Liability Insurance Reform) Bill (Vic); Civil Law (Wrongs) Act 2002 (ACT). Joint Communique, Ministerial Meeting on Public Liability Insurance, 2 October 2002.

[30]      Trade Practices Amendment (Liability for Recreational Services) Bill 2002.

[31]      Taxation Laws Amendment (Structure Settlements) Bill 2002.

[32]      Senator the Hon Helen Coonan, Minister for Revenue and the Assistant Treasurer, press release, Liability Meeting Makes Significant Progress, 30 May 2002 (C64/02), http://assistant.treasurer.gov.au/atr/content/pressrelease/2002/064.asp.

[33]      Senator the Hon Helen Coonan, Minister for Revenue and the Assistant Treasurer, press release, Minister Announces Review Panel, 2 July 2002 (C76/02), http://assistant.treasurer.gov.au/atr/content/pressrelease/2002/076.asp.

[34]      Law Council of Australia, media release, Law Council Announces its Public Liability Experts, 26 July 2002.

[35]      Review of the Law of Negligence: Final Report, September 2002, p. 36.

[36]      Review of the Law of Negligence: Final Report, September 2002, pp. 93–4.

[37]      Submission 55, Australian Council of Professions Ltd, p. 15; submission 95, The Institute of Chartered Accountants in Australia, p. 11.

[38]      CLERP Paper No 9: Proposals for Reform – Corporate Disclosure, p. 96 (proposal 13).

[39]      Review of the Law of Negligence: Final Report, September 2002, p. 175.

[40]      Review of the Law of Negligence: Final Report, September 2002, p. 173.

[41]      Trowbridge Consulting, Public Liability Insurance, Practical Proposals for Reform, May 2002, p. 36.

[42]      Trowbridge Consulting, Public Liability Insurance, Practical Proposals for Reform, May 2002, pp. 4-6.

[43]      Review of the Law of Negligence, Final Report,  September 2002, pp. 71–84.

[44]      Adventure Activities Protection Bill (Vic); Recreational Services (Limitation of Liability) Bill 2002 (SA).

[45]      Review of the Law of Negligence: Final Report, September 2002, Appendix A.

[46]      Submission 81, p. 13.

[47]      Review of the Law of Negligence: Final Report, September 2002, p. 86.

[48]      Review of the Law of Negligence: Final Report, September 2002, p. 86ff.

[49]      Submission 47, p. 20.

[50]      Volunteers Protection Act 2001 (SA), s.4,5.

[51]      Joint Communique, Ministerial Meeting on Public Liability Insurance, 2 October 2002.

[52]      Review of the Law of Negligence: Final Report, September 2002, p. 60-61

[53]      Review of the Law of Negligence: Final Report, September 2002, p. 64.

[54]      Review of the Law of Negligence: Final Report, September 2002, p. 65.

[55]      Trowbridge Consulting, Public Liability Insurance, Practical Proposals for Reform, May 2002, p. 7.

[56]      Trowbridge Consulting, Public Liability Insurance, Practical Proposals for Reform, May 2002, p. 9.

Chapter 4

[1]        Trowbridge Consulting, Public Liability Insurance, Practical Proposals for Reform, May 2002, p. iii.

[2]        Trowbridge Consulting, Public Liability Insurance, Practical Proposals for Reform, May 2002, p. 12.

[3]        Mr Tony Abbott, Committee Hansard, 8 August 2002, p. 268.

[4]        For example, submission 79, Queensland Government; submission 80, Royal Australian College of General Practitioners.

[5]        For example, submission 20, Agricultural Societies Council of NSW Inc, p. 2.

[6]        Submission 47, Queensland Outdoor Recreation Federation, p. 7.

[7]        Review of the Law of Negligence: Final Report, September 2002, p. 193.

[8]        Review of the Law of Negligence: Final Report, September 2002, p. 194.

[9]        Review of the Law of Negligence: Final Report, September 2002, p. 194.

[10]      Committee Hansard, 8 July 2002, p. 24.

[11]      Committee Hansard, 8 July 2002, p. 31.

[12]      Committee Hansard, 8 July 2002, p. 26.

[13]      Committee Hansard, 8 July 2002, p. 26.

[14]      Submission 78, p. 9.

[15]      Submission 98, p. 2.

[16]      For example, submission 34, Mr Nigel Bucknell.

[17]      Committee Hansard, 9 August 2002, p. 371.

[18]      Submission 87, pp. 3-5.

[19]      Trowbridge Consulting, Public Liability Insurance, Analysis for Meeting of Ministers 27 March 2002, March 2002, p. 22.

[20]      Mr P. Cundall (Property Council of Australia), Committee Hansard, 9 August 2002, p. 402.

[21]      Submission 27, ACSIS Limited, pp. 2-3.

[22]      Submission 40, NSW Dept of Sport and Recreation, p. 8.

[23]      Submission 61, p. 20.

[24]      Committee Hansard, 9 August 2002, p. 356

[25]      Review of the Law of Negligence: Final Report, September 2002, p. 57.

[26]      Committee Hansard, 9 August 2002, pp. 391-395.

[27]      Review of the Law of Negligence: Final Report, September 2002, p. 186.

[28]      Submission 99, p. 3. In its website, the Professional Standards Council states that ‘Professional standards schemes underscore the commitment of members of occupational associations to maintain high ethical standards. They encourage professionals to adopt practical risk management strategies to achieve quality of service and to create a culture of excellence and responsibility. That culture supports qualified, proficient practitioners to serve the best interest of clients and provide a proper cover of protection.’ The Council ‘only approves schemes that adopt risk management strategies, complaint and discipline mechanisms, and insurance requirements that are likely to improve standards and protect consumers.’ http://www.lawlink.nsw.gov.au/psc.nsf.

[29]      Submission 42, Royal Agricultural Society of Tasmania, p. 3; Dr Paul O’Callaghan, Australian Horse Industry Council, Committee Hansard, 10 July 2002, p. 265; Ms Therese Charles, Association of Consulting Engineers Australia, Committee Hansard, 8 August 2002, p. 290.

[30]      Royal Australian College of General Practitioners Background Paper On Medical Indemnity Insurance, April 2002, p. 27.

[31]      Royal Australian College of General Practitioners Background Paper On Medical Indemnity Insurance, April 2002, p. 28.

[32]      Committee Hansard, 9 August 2002, p. 395.

[33]      Committee Hansard, 8 August 2002, pp. 316-317.

[34]      Professional Standards Act 1994 (NSW).

[35]      Professional Standards Act 1997 (WA).

[36]      Committee Hansard, 8 July 2002, p. 79.

[37]      Committee Hansard, 8 August 2002, p. 304.

[38]      Submission 18, Surf Life Saving Australia Ltd. Submission 42, Agricultural Show Council of Tasmania.

[39]      Submission 79, Queensland Government, p. v.

[40]      Submission 61, pp. 21-22.

Chapter 5

[1]        Committee Hansard, 9 August 2002, p. 360.

[2]        See for example evidence presented by Mr Nigel Ray, Acting Executive Director, Department of the Treasury, Committee Hansard, 8 August 2002, p. 319.

[3]        Senate Select Committee on Superannuation, Prudential Supervision and Consumer Protection for Superannuation, Banking and Financial Services, First Report, August 2001, p. 45.

[4]        Mr R. Jones, President, Insurance Council of Australia, Committee Hansard, 8 July 2002, p. 48.

[5]        Attachment to submission 132, Actuarial advice on public liability, Cumpston Sarjeant Pty Ltd, p. 4-5.

[6]        Committee Hansard, 8 August 2002, p. 329.

[7]        Submission 127, p. 3.

[8]        Submission 103, p. 12.

[9]        Committee Hansard, 8 August 2002, p. 282.

[10]      Committee Hansard, 8 August 2002, p. 285.

[11]      Committee Hansard, 9 July 2002, pp. 92, 93. The Victorian Employers’ Chamber of Commerce and Industry suggested that the insurance industry maintain a detailed up-to-date incident database that provides business and the insurance industry with a better risk profile of industry segments. Victorian Employers’ Chamber of Commerce and Industry, submission 98, p. 7.

[12]      See the introductory sections of chapters 3 and 4.

[13]      Submission 103, pp. 21–22. In recommending that a national database of policy and claim information be established, the Institute of Actuaries proposed that a system similar to that of the US Insurance Services Office should be created; and that governments be involved jointly to commission an actuarial study of this data.

[14]      Submission 143, p. 4.

[15]      Submission 115, para 3.2.

[16]      See for example Queensland Government, Report, Liability Insurance Taskforce, February 2002 in Queensland Government, submission 79, p, xi; Victorian Employers’ Chamber of Commerce and Industry, submission 98, covering letter and executive summary: ‘The ‘Commonwealth Government has a key role to play in ensuring that there is an appropriate level of data collection, competition and prudential regulation of the Australian insurance industry’.

[17]      National Insurance Brokers Association, submission 33 to the Inquiry into the regulations and ASIC Policy Statements made under the Financial Services Reform Act, Parliamentary Joint Committee on Corporations and Financial Services.

[18]      Dr Darryl Roberts, Committee Hansard, 9 July 2002, p. 133.

[19]      Committee Hansard, 8 August 2002, p. 329. Ms Lynne Curran, Acting Manager, Financial Systems Division, Department of the Treasury restated the point (p. 339): ‘As Ms Allan said earlier, the focus of the APRA data is prudential concerns, so it is not looking at claims data at an individual or disaggregated level’. Section 38, Insurance Act 1973, sets down APRA’s functions in monitoring prudential matters.

[20]      Joint Communique, Ministerial Meeting on Public Liability, Melbourne, 30 May 2002, p. 6 of 12, http://assistant.treasurer.gov.au/atr/content/pressrelease/2002/900.asp (13 August 2002).

[21]      Committee Hansard, 9 August 2002, p. 352.

[22]      Background Paper No. 1, A profile of the General Insurance Industry, Prepared by the Insurance Council of Australia for the HIH Royal Commission, November 2001, p. 4. The Insurance Contracts Act 1984 defines ‘general insurance’ as insurance that is not life insurance: section 11.

[23]      Dr Darryl Roberts, Committee Hansard, 9 July 2002, p. 133.

[24]      Dr Darryl Roberts, Committee Hansard, 9 July 2002, p. 146.

[25]      Australian Law Reform Commission, Review of the adversarial system of litigation, Issues Paper 20, 1997, http://www.austlii.edu.au/au/other/alrc/publications/issues/20/04nature.html (27 August 2002).

[26]      Productivity Commission, Report on Government services 2002, chapter 9 ‘Court administration, section 9.5 ‘Future directions in performance reporting’, p. 500.

Chapter 6

[1]        Committee Hansard, 8 July 2002, p. 70.

[2]        Submission 42, p. [3].

[3]        Submission 50, p. 1. See also submission 51, Illawarra Speleological Society, p. 1. The Australian Council of Professions Ltd cited a draft survey taken by the Australian Institute of Quantity Surveyors which indicated that quantity surveyors with no claims history have borne premium increases of between 50 and 200 per cent. It further shows that in five years only six insurance claims proceeded to court or arbitration and the total payout on claims was just $585,000 yet they were paying total premiums of $2 million a year.

[4]        Submission 64, p. 7. See also Mr Raymond Jones, President, Insurance Council of Australia Ltd, who acknowledged that ‘There are a lot of very innocent victims out there who are being penalised for poor performance and poor risk management on behalf of similar organisations or similar companies across Australia. There are some very innocent adventure risk people who do manage their business very well. The insurance industry has never been able to go down to a one-on-one individual risk level.’ Committee Hansard, 8 July 2002, p. 57.

[5]        Submission 65, St John Ambulance Australia, p.[2]; submission 68, Australian Private Hospitals Association Limited, p. 3; submission 70, Australian Nursing Federation, p. [2]; submission 73, Outdoor Recreation Council of Australia Incorporated, p. [1]; submission 77, Volunteering Australia, p. 9; submission 82, Australian Rugby League Limited, p. 1; submission 94, Financial Planning Association of Australia Limited, p. 8, submission 95, Institute of Chartered Accountants, p. 8; submission 100, Australian Cricket Board, p. 2; submission 112, the Australia Council, executive summary. See also The South Australian Country Women’s Association Incorporated, submission 17, p. 1; submission 129, Outdoors WA, p. [2]; submission 92, Logikal Health Products, p. 1; submission 96, Australian Council of Social Service, p. [2]; submission 97, Queensland Tourism Industry Council, p. 1. This list does not include all submissions that commented along similar lines.

[6]        Submission 125, CPA Australia, p. 3.

[7]        Submission 94, Financial Planning Association of Australia Limited, pp. 8–9.

[8]        Submission 95, Institute of Chartered Accountants, p. 7.

[9]        Committee Hansard, 8 July 2002, p. 3.

[10]      Committee Hansard, 9 July 2002, p. 93. See also Ms Sha Cordingley, Chief Executive Officer, Volunteering Australia, Committee Hansard, 10 July 2002, p. 176; Dr Rhonda Galbally, Chief Executive Officer, Our Community, Committee Hansard, 10 July 2002, pp. 183–4, 186; Ms Karen Curtis, Director, Industry Policy, Australian Chamber of Commerce and Industry, Committee Hansard, 10 July 2002, p. 237. Dr David Stephens, Policy Consultant, Australian Council of Professions Ltd, called for better information to be provided particularly the reasons for rises. He told the Committee, ‘The discipline of requiring in some way—whether through self-regulation or some other way—an insurance company to specify what component of a rise was attributable to what cause we think would make a hell of a difference in this field.’ Committee Hansard, 8 July 2002, p. 41. Australian Business Ltd endorsed the need for insurance companies to open their books on a confidential basis to assist in the identification of the causes of rising premiums. It also suggested that, ‘At the very least insurers need to be encouraged to embark on a communication campaign which explains to their customers why individual risk circumstances may be irrelevant in assessing the level of premium for public liability and professional indemnity insurance. Australian Business Limited, submission 115, p. 4.

[11]      See for example, submission 102, Royal College of Nursing Australia, p. 4. See also submission 142, Australian Institute of Quantity Surveyors, p. [3].

[12]      Submission 85, p. 6.

[13]      Committee Hansard, 8 July 2002, p. 64. See also statements by Stephen Harrison, Institute of Chartered Accountants, Committee Hansard, 8 August 2002, p. 308.

[14]      Committee Hansard, 9 July 2002, pp. 103–4. See also Dr Paul O’Callaghan, President, Australian Horse Industry Council, Committee Hansard, 10 July 2002, p. 262.

[15]      See for example, submission 44, Sport Industry Australia, p. 3; submission 77, Volunteering Australia, p. 9; submission 71, Our Community, p. [2].

[16]      Submission 55, 12.

[17]      Submission 44, p. 3. See also, submission 90, Australian Chamber of Commerce and Industry, p. 6.

[18]      Submission 81, p. 3. Mr Neil Coulson, Chief Executive Officer, Victorian Employers Chamber of Commerce and Industry, suggested that the insurance industry become more innovative in its approach. Committee Hansard, 10 July 2002, p. 232.

[19]      Submission 142, Australian Institute of Quantity Surveyors, p. [3].

[20]      Submission 91, p. 4.

[21]      Submission 55, Australian Council of Professions, p. 17.

[22]      Committee Hansard, 8 July 2002, p. 34.

[23]      Committee Hansard, 10 July 2002, pp. 256-7.

[24]      Committee Hansard, 8 August 2002, p. 307.

[25]      Committee Hansard, 8 August 2002, p. 308.

[26]      Committee Hansard, 8 July 2002, p. 59.

[27]      Committee Hansard, 8 August 2002, p. 308.

[28]      Committee Hansard, 8 August 2002, p. 341.

[29]      Committee Hansard, 9 August 2002, p. 354.

[30]      See paragraphs 1.49–51.

[31]      Senator the Hon Helen Coonan, Minister for Revenue and the Assistant Treasurer, Joint Communique, Ministerial Meeting on, Public Liability, Melbourne, 30 May 2002.

[32]      Productivity Commission, Public Liability Claims Management, Terms of reference, http://www.pc.gov.Australia/research/studies/insurance/tor.html (15 August 2002).

[33]      Senator the Hon Helen Coonan, Minister for Revenue and the Assistant Treasurer, Joint Communique, Ministerial Meeting on Public Liability, Melbourne, 30 May 2002.

[34]      See Part VB—Price exploitation in relation to A New Tax System, Trade Practices Act 1974. The legislation confers on the ACCC a number of statutory responsibilities including—to formulate guidelines, to issue a Notice when it considers a business has contravened the prohibition on price exploitation, to take court enforcement action, to monitor prices and to report to the Minister. See also, the ACCC, Price Exploitation and the New Tax System, http://gst.accc.gov.au/publications/24mar_final.htm  (25 August 2002).

[35]      For more information on the work of the ACCC under Section 75AZ of the Trade Practices Act 1974, see Report to the Minister Under Section 75AZ of the Trade Practices Act 1974, 1 April to 30 June 2001, and 1 July to 30 September 2001.

[36]      Committee Hansard, 10 July 2002, p. 186.

[37]      Committee Hansard, 8 July 2002, p. 42: ‘I think we said that APRA, again, should investigate whether professionals with low numbers of claims are cross-subsidising claims by others’.

[38]      Committee Hansard, 8 August 2002, p. 314.

[39]      Submission 127, p. 1.

[40]      See for example: the Age, ‘APRA hits back at critics over HIH’ 26 June 2001; the Age, ‘Ex-Treasury head takes aim at HIH’, 10 August 2001; the Advertiser, “Financial authority ‘too slow’”21 August 2001; the Sydney Morning Herald, ‘Mystery why watchdog didn’t bite’, 1 September 2001; the Western Australian, ‘Why weren’t HIH bells loud, clear?’, 1 September 2001; the Sydney Morning Herald,  “HIH crash ‘caught napping’”, 4 December 2001; the Australian Financial Review, “HIH collapse signs ‘relatively clear’”, 4 December 2001.

[41]      Speech by the Hon Joe Hockey, Minister for Financial Services & Regulation, Keynote address for the ICA Canberra Conference, 9 August 2001.

[42]      Speech by the Hon Joe Hockey, Minister for Financial Services & Regulation, Keynote address for the ICA Canberra Conference, 9 August 2001. The Supplementary Explanatory Memorandum to the General Insurance Reform Bill 2001 stated that amendments to the enforcement provisions of the Insurance Act ‘were not initially included in the Bill as they were to be considered in a separate process to update and harmonise enforcement and resolution of failure provisions across all Australian Prudential Regulation Authority regulated institutions’. It noted further ‘following the failure of the HIH Insurance Group (HIH) it is proposed that some enforcement provisions that relate specifically to general insurance be brought forward for inclusion in the Bill’. The proposed amendments were ‘to enhance APRA’s investigative powers and its ability to gather information and issue directions to an entity’.

[43]      Graeme Thompson, ‘APRA—3 years on’, Speech, 9 August 2001.

[44]      Senator S. Conroy, Senate Hansard, 27 June 2001, p.25163.

[45]      Submission 123, p. 11.

[46]      Committee Hansard, 8 August 2002, pp. 321-2, 343.

[47]      Committee Hansard, 8 July 2002, p. 29. See also Dr Michael Sedgley, Chairman of Council, Australian Medical Association, who agreed that medical defence organisations should be more accountable to their members. Committee Hansard, 8 July 2002, p. 23.

[48]      Submission 143, p. 3.

[49]      Press Release, Prime Minister, Medical Indemnity Insurance, 31 May 2002.

[50]      Committee Hansard, 8 August 2002, p. 343.

[51]      For more detail see http://www.accc.gov.au/about/about.htm (25 August 2002).

[52]      Australian Competition and Consumer Commission, Second Insurance Industry Market Pricing Review, September 2002.

[53]      Mr Brian Cassidy, Chief Executive Officer, ACCC, Committee Hansard, 9 July 2002, p. 111.

[54]      See for example, submission 55, Australian Council of Professionals Ltd, p. 17.

[55]      Submission 59, p. 11.

[56]      Committee Hansard, 8 July 2002, p. 69.

[57]      Australian Securities and Investments Commission Act 2001, Part 2, Division 2. Trade Practices Act 1974, Part IVA. In the Trade Practices Act one unconscionable conduct provision - s51AB - does not apply to financial services (it is replicated in s12CB the ASIC Act). Another unconscionable conduct provision - s51AC - is replicated in s12CC of the ASIC Act but also continues to apply in the Trade Practices Act.

[58]      Committee Hansard, 9 August 2002, p. 113.

[59]      Committee Hansard, 9 July 2002, p. 114.

[60]      Committee Hansard, 9 July 2002, p. 123.

[61]      Committee Hansard, 9 July 2002, p. 123.

[62]      Committee Hansard, 9 August 2002, p. 384.

[63]      ACCC, Media Release, Consumers Need Clear Insurance Information, 26 March 2002.

[64]      For more details see: http://www.asic.gov.au/asic.nsf/byheadline/ASIC+at+a+glance?open document (25 August 2002).

[65]      Section 12A(3), Australian Securities and Investment Commission Act 2001.

[66]      Section 12A(1), Australian Securities and Investments Commission Act 2001.

[67]      Section 11B, the Insurance Contracts Act 1984,  compiled 11 March 2002.

[68]      Section 11.

[69]      Exemptions do apply such as bodies regulated by APRA if the service is one in relation to which APRA has regulatory or supervisory responsibilities and the service is provided only to wholesale clients.

[70]      Part 2, subdivision 2 C and D, Australian Securities and Investments Commission Act 2001.

[71]      See Appendix 7, additional information from ASIC, 2 October 2002.

[72]      Financial Services Reform Act 2001, schedule 1 inserting s912A in the Corporations Act 2001.

[73]      PS 139.13, ASIC, Policy Statement139, Approval of external complaints resolution schemes, issued 8/7/1999, obtained from ASIC’s website, 23 September 2002. See also ASIC http://www.asic.gov.Australia/fido/fido.nsf/byheadline/General=Insurance+Code+of+Practice (22 September 2002). See also Mr Peter Kell, ASIC, Committee Hansard, 9 August 2002, p. 379.

[74]      pers. comm. P. O’Connor, Public Affairs Manager, Insurance Enquiries and Complaints Ltd, September 2002.

[75]      Financial Services Reform Act 2001, schedule 1 inserting s761G in the Corporations Act 2001. Section 761G—Meaning of retail client and wholesale client—specifies the classes of general insurance covered under the term retail client. Although public liability and professional indemnity insurance is not listed, subsection (viii) provides for the inclusion of a kind of general insurance product prescribed by regulations made for the purposes of this subparagraph. 

[76]      See answer to question 1, Appendix 7, additional information from ASIC, 2 October 2002.

[77]      Section 1.2, the General Insurance Enquiries and Complaints Scheme, Terms of Reference, 1 May 2002. Section 761G(12), Financial Services Reform Act 2001, defines small business as a business employing less than 100 people if the business is or includes manufacture of goods, otherwise 20 people. The General Insurance Enquiries and Complaints Scheme defines small business as an individual, a partnership of natural persons or a corporation whose shareholders are natural persons; and which has no more than 5 employees (including working proprietors) at any one time; and has an annual turnover not exceeding $400,000.

[78]      Mr P. Kell, Committee Hansard, 9 August 2002, p. 379.

[79]      Financial Services Reform Bill 2002, explanatory memorandum, par. 6.10.

[80]      Australian Securities and Investments Commission Act 1989, compiled 19 July 2001.

[81]      Insurance Act 1973, compiled 15 July 2001, section 113, Compliance with codes of insurance practice, read:

1. If:
   1. a code or codes of practice have been approved by ASIC in relation to the carrying on of a class of insurance business prescribed for the purposes of this section; and
   2. a person carries on that class of insurance business on a day when the person is not a party to an agreement to comply with the code or one of the codes; the person is, in respect of that day, guilty of an offence punishable on conviction by a fine of not more than:
   3. if the person is a body corporate—200 penalty units; or
   4. if the person is a Lloyd's underwriter and is not a body corporate—20 penalty units.

[82]      Section 1101A, Approved codes of conduct, Financial Services Reform Act 2001.

[83]      General Insurance Code of Practice, http://www.ica.com.au/codepractice/introduction.asp (10 August 2002).

[84]      General Insurance Code of Practice, http://www.ica.com.au/codepractice/policy.asp (10 August 2002).

[85]      Other classes may be covered optionally by participating insurers (clause 2.1, definition of ‘insurance business’, item (c)). However the Committee understands that few if any participants take advantage of this clause, since most public liability or professional indemnity insurance buyers would in any case be excluded as not being individuals buying for domestic use.

[86]      Insurance Council of Australia, Senator welcomes new code to improve insurance customer service, media release 22 August 2002.

[87]      Mr Tony Abbott (Law Council of Australia), Committee Hansard, 8 August 2002, p. 269.

[88]      Submission 132, Law Council of Australia, attachment: Actuarial Advice by Cumpston Sarjeant Pty Ltd to Mr Tony Abbott, pp. 8–9.

[89]      Submission 71, pp. [4, 5].

Supplementary report by Australian Democrats

[1]        In NSW a statutory regime applies under the Minors (Property and Contracts) Act 1970. Under this Act contracts are presumed to be binding if they are for the minors benefit. It is unlikely that contracts that waive a minor’s right to sure for negligence fall into this category.

[2]        Signing a document under a mistake gives rise to a special defence referred to as non est factum.  The circumstances where it can be revoked are very rare as per the High Court case of Petelin v Cullen (1975) 132 CLR 355. Non est factum is only available for people who must rely on others for advice through no fault of their own, for example, the blind and the illiterate. 

[3]        ACCC Media Release, “Consumers Need Clear Insurance Information: ACCC” dated 26 March 2002 also highlights this point.

[4]        In June 2002, the ABIO, IEC and FICS announced the establishment of a common toll free number through which consumers would be directed to the appropriate complaint resolution service.  While this signifies a significant shift in operations, very little media attention was available to promote the change.  The full integration of these 3 services into one body is at least 12 months away.

[5]        See www.ica.com.au/codepractice.

[6]        See www.bankers.asn.au/ABA/Online/default.asp

[7]        ASIC approved the insurance code of practice in August 2000.  Visit the following site for details http://fido.asic.gov.au/fido/fido.nsf/byheadline/General+Insurance+Code+of+Practice+fido+page?opendocument

[8]        According to SMH 31.7.02 unfunded liability to June 2001 was $NZ3.9 billion

[9]        Australian Competition and Consumer Commission, Insurance Industry Market Pricing Review, March 2002.

[10]       APRA statistics from 1 January 2001-31 December 2001 show that the total number of public and product liability policies was 2,438 (product and public could not be separated in the statistics) and the total number of policies for general insurance was 41,033.  Therefore, public and product liability policies account for 5.94% of the total number of policies.

[11]       According to the Financial Services Consumer Policy Centre, the ACCC Pricing Review highlights that public liability is a less regulated class of insurance and this has enabled insurance companies to compete on the terms and conditions of the premiums, as well as the price of premiums.

[12]       Prior to 1 July 2002 there was a requirement that where an insurer takes out reinsurance, it must be APRA approved.  However, since the reforms s34 of the Insurance Act no longer applies to reinsurance.

[13]       A collapse like the one experienced by HIH is rare.  Most insolvencies have been due to fraud involving directors or CEO’s absconding with the company’s money (in the case of the Bishopsgate fraud the CEO took the money with himself to Greece in 1983) or a con man buying the insurance company with the company’s money (in the case of Occidental Insurance and Regal Insurance, a fraudulent purchase of an insurance company from Richard Pratt in 1990).

[14]       See www.apra.gov.au/AboutAPRA/Annual-Report-2001.cfm

[15]       Senate Economics Committee Hansard 8 July 2002, p59.

[16]       Doroshow J, Premium Deceit: The Failure of “Tort Reform” to Cut Insurance Prices, study conducted by the Centre for Justice & Democracy, 25 March 2002

[17]       Premier Carr releases landmark public liability legislation, Premier Bob Carr, 3 September 2002.

[18]       Proposed law will let people say sorry, Hon Kevin Foley, 13 August 2002.

[19]       Public liability insurance package, David Crean , 11 September 2002.

[20]       State Government introduces public liability relief legislation, Hon Geoff Gallop, 14 August 2002.

[21]       While descriptions vary in the State budget papers it is likely that stamp duty accounts for the bulk if not all revenue from insurance.  NSW received $480mil in 2001-2, VIC received $789.8mil in 2002-3, QLD received $238.5mil in 2001-2 (including workers comp premiums), WA received $270.9mil in 2001-2, SA received $224.8mil in 2001-2, TAS received $250mil in 2000-1, ACT received $739mil in 2001-2 (including life insurance) and NT received $15.7 in 2001-2.

[22]       Financial Review, “ACCC uncovers big insurance returns”, 21 September 2002, the ACCC in a recent review have found that several types of insurance will make returns on capital above 50%.

[23]       Fleming, The Law of Torts (9^th edition) 1998 LBC, p329.