The Victorian Government’s package of liability reforms will not have a significant impact on the cost of claims for many years, according to the Insurance Council.

ICA is concerned that the reforms, due to be announced this week, will apply only to injuries that occur after the second reading of the Bill in Parliament. Furthermore, it is worried that the Bill will not have a claims threshold for general damages such as pain and suffering.

Reforms introduced in NSW stipulated thresholds, became effective from the date the legislation was first announced, and covered claims that had not already gone to court.

But ICA has received information that Victorian liability reforms will apply only after the Bill’s second reading. “If it is correct that there will be no effect on injuries which occur before the second reading speech, the impact of any reforms will not be felt for years,” ICA’s Victorian Manager Peter Jamvold said.

He says this is because of the long-tail nature of public liability insurance, which allows claims to be made several years after the injury occurs. “In the case of children, this can be as much as 20 years later.

“This is one of the key reasons for the unpredictability and instability facing insurers when they try to price liability premiums. It is extremely difficult to set a price now to cover the cost of claims 20 years later when the level of court awards and medical costs are very hard to predict,” he said.

While the Victorian Government intends placing a $360,000 cap on general damages for bodily injury, this is believed to be without a threshold amount below which there will not be a general damages payment.

Mr Jamvold says a limitation on general damages won’t restrict plaintiffs from claiming other costs such as loss of earnings, and won’t apply to small claims.

“While a cap may be useful in restraining general damages payments in large claims, without a threshold it will have no effect in reducing general damages awards in small claims, which are one of the significant cost drivers in public liability claims,” he said.