They took their time, but insurance industry leaders have at last hit back at the bitter anti-tort reform campaign being mounted by lawyers around the country. Over the past few months some very prominent members of the legal fraternity – including several state and territory chief justices and even High Court Judge Michael Kirby – have expressed concern at the capping of personal injury damages payouts. Their rationale has been simple: insurers are making good profits, so there was never any need to raise liability premiums.

Now IAG CEO Michael Hawker and Suncorp CEO John Mulcahy have fired back at the legal industry snipers, using yesterday’s Australian Financial Review to characterise the legal profession as self-interested profiteers.

The intervention of the two CEOs – who are also President and Vice President respectively of the Insurance Council of Australia (ICA) – brings some perspective back to what was becoming a one-sided argument. And it was needed: NSW, Queensland, Victoria and Tasmania are reviewing their tort reforms, and are reportedly being heavily lobbied by the legal industry.

In yesterday’s front-page article, Mr Mulcahy accused lawyers of “trying to bolster their income”.

“Lawyers are complaining because they are not able to generate their own income,” he told the newspaper.

Mr Hawker was equally scathing, pointing out that US research has shown more than half the money awarded to claimants actually goes to their lawyers. “Whose interest is being served in an environment with US-style litigation?”

ICA Deputy CEO Dallas Booth told Sunrise Exchange News insurers have already reduced premiums by more than was initially predicted by actuaries before the reforms came into action.

“Before the reforms were introduced it was estimated that public liability premiums would reduce by an average of 13.5%,” he said. “But the last Australian Competition and Consumer Commission price monitoring report shows premiums have dropped by 15%, and in some cases more.”  

So far state governments are standing firm in the face of the lawyers’ campaign. Last week Laurie Glanfield, Director-General of the NSW Attorney-General’s Department, told the parliamentary inquiry into tort reform that prior to the reforms there was a “tendency of lawyers to search for deep pockets in the hope of finding wealthy organisations… or insured individuals or bodies who could be sued”.

“It would appear that as a result of the reforms, solicitors and barristers practising in personal injury have experienced a decrease in the volume of work available to them, which equates to a reduction in income in what was previously a lucrative area,” he said.

“Lawyers are engaged to represent injured clients, certainly; however, they derive income from this – in some cases a lot of income. It is important that we do not lose sight of this when we listen to what they have to say about the reforms.”

Mr Glanfield says his department remains positive about the reforms, and they should continue to serve their purpose. “In recent times the Government has been greatly encouraged by what we are beginning to see: insurance premiums for public liability and professional indemnity, as well as medical indemnity, dropping by up to 17%.”

Just as encouraging to the insurers was a generally supportive editorial in the Australian Financial Review yesterday headlined “Tort reform is doing its job”. It concluded: “The self-interested campaign against reform shows profits are never far from some lawyers’ thoughts.”