The prospect of finding a resolution to the insurance crisis is looking more optimistic. Last week the final report from the Ipp panel was released, with the nation’s attorney general confirming they will consider the recommendations.

The Review of the Law of Negligence report, otherwise known as the Ipp report– incorporates the panel’s first report released in early September. The final report provides a number of key recommendations including:

• Capping general damages payouts at $250,000 and introducing thresholds to remove small claims from the system;
• Limiting legal costs to $2500 in cases where the award of damages is between $30,000 and $50,000;
• Abolishing orders for legal costs when the award of damages is less than $30,000;
• Capping loss of earnings to twice average full-time earnings;
• Defendants should only be responsible for a risk that is “not insignificant” rather than “far fetched” or “fanciful” risks;
• Plaintiffs who contribute to their own injuries can be held 100% responsible;
• Providing a limited defence for public authorities, such as local councils, where they have taken a decision on policy grounds not to perform a specific public function, such as a road inspection;
• Claims for mental harm to be limited to plaintiffs who are suffering from a “recognised mental illness” and not simply because an injury may have led to “vague feelings of depression”.

These recommendations were discussed at the third ministerial summit held in Sydney last Wednesday. Ministers have agreed to consider the recommendations and report their decisions at another ministerial summit in November.

The mixed reactions:

As one would expect, the Ipp report recommendations were welcomed by the insurance industry but condemned by the legal profession. State and territory politicians also seemed to indicate mixed reactions.

ICA Executive Director Alan Mason praised the report but once again cautioned that the recommendations should be adopted nationally. “At the moment, a number of states do not have any general damages thresholds in their reforms or have done it in a way which we believe will be ineffective,” Mr Mason said.

He said he was “heartened” by the commitment from Ministers “in principle” to continue to work towards nationally consistent legislation, but that the “crucial issue” is a timeframe for how the states should progress.

He also praised the Ipp report for taking a “NSW approach”, by recommending caps be placed at 15% of the most extreme case. 

But Australian Plaintiff Lawyers Association National President Rob Davis reiterated that the reforms would take away consumers’ rights. “Senator Coonan has shown both a lack of understanding of the principles of compensation law, and a lack of compassion for the negligently injured,” Mr Davis said.

He said there is still no evidence that the reforms will reduce insurance premiums and that in any event “insurers are returning to profitability without the help of tort reform”.

But Federal Assistant Treasurer Helen Coonan said the 61 recommendations have the potential to “significantly reform” the legal system underlying medical negligence, public liability and professional indemnity claims.

“Australians are clearly saying to their leaders that some of the payouts coming from the courts just don't seem to make sense and they want some balance restored to the system.”

She said the Federal Government is “very keen” to see a unified approach adopted. “We want to make sure that we can do everything we can to assist the states in the process of seeking nationally consistent tort law reform,” she said.

On release of the Ipp report, NSW Treasurer Michael Egan said he would suggest changes to his government's hardline package of negligence law reforms. However, these changes won’t be revealed until the second round of the NSW public liability reforms are introduced into Parliament on October 22.

The Victorian Government also welcomed the report, saying it “provides a detailed blueprint for reform”.

“The Bracks Government will consider it closely,” Victorian Finance Minister John Lenders said. But he said the Victorians are concerned about consumer protection measures. “We want to know how the proposals will impact on premiums paid by consumers.”

Tasmanian Treasurer David Crean said the Ipp recommendations were complex, but still indicated support. He said adopting the recommendations would lead to lower premiums.

However, the governments of WA and SA were not unified in their stance with the other state ministers. WA Minister for Government Enterprises Nick Griffiths said his government would not cap injury payouts, while SA Treasurer Kevin Foley accused the insurance industry of being “all talk and no action” in passing through lower reductions in premiums.

The fact that most state ministers have failed to fully commit to the Ipp recommendations makes a national approach look unlikely. So far, the only certainty is that the ministers have expressed they will “consider” the proposals but which way they decide to go is yet to be seen.