A no-fault compulsory third party (CTP) scheme is what Queensland needs if the state is to put a stop to the widespread practice of “claim farming”, a parliamentary committee has heard.

Suncorp and RACQ Insurance, which had representatives appear yesterday before the Parliamentary Economics and Governance Committee, say the measures the Government has proposed to fix the problem do not go far enough.

Creating two new offences to prohibit claim farming and strengthening the enforcement and special investigation powers of CTP scheme regulator, the Motor Accident Insurance Commission (MAIC), are among the legislative changes introduced in parliament last month.

The amendments to the Motor Accident Insurance Act also call for expanding MAIC’s functions to prosecute claim farming.

Suncorp and RACQ Insurance, two of four insurers involved with the CTP scheme, expressed support for the changes but believe deeper reforms including a switch to a no-fault system are required.

“The best way to disrupt claim farming is to remove the financial incentive provided by a lump sum payment model through introducing a no-fault, defined benefit CTP scheme,” Suncorp spokesman Dan Wilkinson said.

“Under a no-fault, defined benefits scheme, the focus is on rehabilitation, not compensation, while providing care, treatment and lost income as required, rather than a single payment at the end of a claim which could be years after an accident.

“It would also mean greater protection for the estimated 40% of people injured in a motor vehicle accident that currently get nothing.”

Claim farming refers to cold calls made to individuals asking if they have been involved in an accident and making false promises of quick and easy compensation. These callers often harass or use other high-pressure tactics to extract personal details that are then sold to lawyers or other third parties.

“The ability for lawyers to take 50% of a lump sum claim settlement as fees provides the strong financial incentive to maintain claim farming,” Mr Wilkinson said.

“We provide the regulator with detailed data on our operations, claims handling procedures and financial metrics, yet there’s nothing in place to monitor how much money lawyers take from claimants’ payouts.”

RACQ Insurance says the state’s residents deserve a CTP scheme that provides full protection from criminals and unscrupulous lawyers.

“CTP is there for those who are truly injured and we need to make sure it isn’t overtaken by these sort of dodgy claims,” spokesman Paul Turner said.