ICA Advocates for Overhaul of Civil Liability Laws to Ease Insurance Burden

In its submissions to the Parliamentary Joint Committee's inquiry into small business insurance, the ICA outlined several key areas requiring immediate attention:

• National Review of Liability Laws: The ICA advocates for a comprehensive national review to tackle the escalating claims costs, including the surge in psychological injury and legal claims that directly impact insurance premiums.
• Caps on Legal Costs and Streamlined Claims Processes: Implementing caps on legal fees and simplifying claims procedures aims to prevent legal expenses from consuming a disproportionate share of compensation payouts and to expedite claim resolutions.
• Ban on Claim Farming: The practice of 'claim farming,' where individuals are pressured into lodging injury claims, has been identified as a factor inflating claim volumes and costs. The ICA recommends a national ban to curb this issue.
• Fairer Government Procurement Rules: The ICA calls for procurement rules that prevent small businesses from being compelled to obtain insurance coverage exceeding the actual requirements of their contracts or accepting liability for uninsurable risks.

Andrew Hall, CEO of the ICA, emphasised the urgency of these reforms, stating that a significant portion of funds intended for injured parties is being diverted to cover legal costs, delays, and bureaucratic processes. He noted that it has been a quarter of a century since these laws were last thoroughly examined, and the need for reform is now overwhelming.

Hall further highlighted the broader implications of unaffordable insurance, pointing out that when local businesses or community organisations cannot secure coverage, the entire community suffers. He stressed that well-targeted reforms can reduce costs while ensuring fair compensation for injured individuals, and the ICA is committed to collaborating with governments to achieve this outcome.

The ICA's call for reform is supported by a white paper titled 'A Sustainable Public Liability Insurance Market in Australia: The Case for Civil Liability Reform,' which provides a detailed analysis of the current challenges and proposed solutions. The paper identifies three priority areas for reform:

1. Psychological Injuries: These claims are often more complex and time-consuming, leading to prolonged claim periods and increased costs.
2. Legislation Governing Dangerous Recreational Activities and Obvious Risks: Existing laws in this area have not been comprehensively reviewed since 2001 and may no longer be relevant to current circumstances.
3. Increasing Cost of Worker-to-Worker Public Liability Claims: The legal complexities and inflated number of such claims are significant cost drivers for public liability insurance.

The ICA continues to work with various industries on risk reduction and mitigation strategies to help lower business costs. However, it underscores that ensuring laws support a sustainable and fit-for-purpose public liability insurance market is essential for supporting businesses and community organisations across Australia.