An Australian Democrats submission on public liability to be presented to the March 27 meeting of Commonwealth and state ministers, contains several flaws, according to the Insurance Council. It says statistical arguments and assessments presented in the submission aren’t accurate and don’t take account the effect HIH has on industry statistics.

ICA Deputy Chief Executive Philip Maguire said the paper “wrongly suggests the situation is easing, based on the statistics for public liability for the year to June 2001. However, the figures do not include the claims data from HIH, one of the biggest public liability insurers before it collapsed, because HIH failed to report them to APRA. 

“To be able to compare apples with apples, we need APRA to do an analysis of previous years without HIH’s returns.”

He said ICA was also collecting data to assist the forum. Between 1998 and 2000 claims increased from 55,000 to 88,000.

“We strongly reject suggestions that there has been any market failure. To remain viable, insurers have reacted to claims experience and between 1998 and 2000 claims exceeded premiums by $960 million,” Mr Maguire said.

Democrats financial services spokesman Aden Ridgeway said the rise in public liability insurance “is primarily due to changes in market conditions in the insurance industry rather than any blowout in litigation”.

But Mr Maguire said the Democrats’ suggestion that litigation has not increased ignores the fact that many claims do not reach court”. “Statistics on litigation alone do not give a true indication of the trends. It only needs an injury to be reported or a solicitor’s letter of demand to be received for insurers to begin costly investigations to assess the extent of liability,” he said.