Page 252 - Week 01 - Thursday, 17 February 2011
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The government resiled from addressing the second and third elements of lump sum costs—namely, non-economic loss and economic loss—in the 2008 reforms. While the motoring public, insurers and most interest groups overwhelmingly welcomed the CTP law and sought a full suite of reforms, others did not. The government, therefore, decided to measure scheme performance over a reasonable time and test the assumptions underlying the reforms to ensure that they were on the right track and to prove the value proposition. They are, and it has.
These outcomes, therefore, have given the government the confidence to proceed with the second and third tiers of the CTP restructure—namely, the restructure of lump sum damages and the refinement of economic loss to secure the best management compensation framework available for injured crash victims and premium payers.
The primary objectives of this bill are to complete the phased array of scheme structure reforms and to double the percentage of available scheme costs applied to medical treatment, rehabilitation and return to health. It also lays the groundwork for lower premiums and cements the competition proposition.
With respect to non-economic loss, the bill the government has tabled today will encourage claimants to focus on health and rehabilitation to achieve the best outcomes for their health and wellbeing. It will do this by introducing a statutory minimum impairment threshold process specific to non-economic loss.
As I have said earlier, compulsory third party is compulsory, which means that the community is obliged to pay premiums. Our scheme is, however, a common law scheme, which means that compensation based on common law precedent is payable once liability has been established. It is not a statutory benefits scheme, and we cannot compel complainants to commence rehabilitation.
What is appropriate, and is therefore proposed by this bill, is to encourage claimants to use the early treatment and rehabilitation options that already exist under the scheme. Under the existing scheme, non-economic loss damages are awarded or negotiated by reference to the pain and suffering of a claimant. In this environment, there is a strong disincentive to maximise medical recovery where this would result in lower lump sums for non-economic loss. As a consequence, adequate medical treatment was often delayed until settlement, which, as we have seen, averaged at 1,161 days—that is, around three years and two months. Having settled a claim, the responsibility for managing their future medical treatment falls to the claimant. Needless to say, in many cases, the opportunity for really effective treatment has passed. In other cases, the claimant may not be keen to incur the cost of ongoing medical treatment out of their lump sum. In either case, the result was a less than satisfactory health outcome.
The bill that the government is tabling today will turn the incentives completely around. Those injured persons below the threshold impairment will have no incentive to seek to maximise non-economic loss lump sum payments. It is, therefore, in their interests to undertake all the necessary rehabilitation at the insurers’ expense as soon as possible. This means much better prospects for complete recovery.
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