Page 251 - Week 01 - Thursday, 17 February 2011

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Between the year 2000 and 2007, approximately 8½ thousand CTP claims were finalised. Over that period ACT motor crash victims made claims at double the Queensland or New South Wales rate, and their claims took an average of 1,161 days to resolve. Fifty-two per cent of the costs of our CTP scheme were consumed by legal costs and lump sum damages covering non-economic loss. Some people prefer the emotive term “pain and suffering”. It made up 33 per cent of scheme costs. Legal costs consumed 19 per cent, or nearly $1 of every $5 paid in premiums. Coupled with the high average wage rates in the ACT, economic loss claims accounted for 23 per cent of scheme costs. This meant that only one-quarter of our scheme costs were left for the true purpose of why statutory compensation schemes exist and are compulsory—namely, treating injured crash victims and returning them to health.

It needs to be understood that, over the years, successive ACT governments had no authority to demand and apply necessary information about how the scheme was running. Consequently, the CTP scheme ran blind under a private monopoly, the worst kind of situation. The government acted in 2008 with the start of a phased array of essential reforms, starting with the Road Transport (Third-Party Insurance) Act 2008, the CTP Law. The CTP law effected baseline reform, drawing principally on New South Wales and Queensland models, in the following areas: premium setting and insurer regulation, providing necessary and early rehabilitation, claims and litigation procedures, legal costs—a key scheme costs pressure, and updating statutory classifications.

We began from a zero base in terms of scheme data and information when this project started in 2006. The 2008 reforms were the foundation stone of scheme reform; they were low key, based on existing models and, frankly, conservative and carefully crafted. However, the government understands that the 2008 reforms, the first in 60 years, placed in an environment in which any type of regulation at all was viewed as alien, were viewed by some as radical. Indeed, the same special interest groups regard the amendments introduced today as radical and shocking. However, these further reforms are both structured and incremental.

Members will naturally be interested to know how the 2008 reforms are working. While the new scheme has only been in operation for just over two years, these foundation reforms are working as designed. Our scheme actuary reports that, for the first batch of resolved claims under the 2008 scheme, medical and rehabilitation costs have risen, as indeed was the intention of the 2008 reforms. Settlement times have reduced, some to within the optimal settlement window of 462 to 574 days as designed into chapter 4 of the CTP law. This reflects the specific intent unanimously expressed by this Assembly when it chose to enact the 2008 reforms.

These amendments build on the 2008 reform package by encouraging early rehabilitation and putting the focus back on health and not the gravy train that CTP claims once were for just about everyone but the claimant. These amendments do this by providing the necessary value-adding around injury identification, assessment, medical review and the compensation structure to complement those reforms. They also deal with a few inefficiencies that have arisen in connection with the motor crash litigation industry. I will have more to say about this later.

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