The Insurance Council of Australia (ICA) has stressed to the state governments that tort reforms are working and should not be reversed.

At a two-day meeting of state and territory attorneys-general on the Gold Coast last week, Victoria’s Attorney-General Rob Hulls and his Queensland counterpart, Rod Welford, criticised the industry, saying premiums were still too high despite record profits.

Mr Hulls also said that while the Australian Competition and Consumer Commission (ACCC) has indicated that it monitors insurers, it can’t ascertain a direct connection between tort law reform and insurance premiums.

Mr Welford said he wants the Federal Government to give the ACCC the power to control insurance pricing.

ACCC Director of Public Relations Lin Enright told Sunrise Exchange News its monitoring role “will continue for the next few years”.

“In terms of the attorneys-general pushing for more ACCC powers, the Federal Government makes policy and not the ACCC and we’re not able to comment on this,” she said.

Also speaking at the conference was Queensland’s Chief Justice, Paul de Jersey, whose comments echoed NSW Chief Justice Jim Spigelman, who said the tort reforms had cut too deeply.

However, ICA says that Justice De Jersey was not fully aware of the facts when making recent comments on the impact of tort reform. 

Executive Director Alan Mason says despite Justice De Jersey’s assertion that premiums had not “appreciably reduced”, the ACCC’s most recent pricing review found liability premiums had dropped 15% in the first half of this year, with expectations of further falls.   

“The 15% drop compares to calculations by actuaries appointed by Commonwealth and state governments in 2002 that the reforms would achieve a 13.5% reduction,” Mr Mason said.   

“There is comprehensive and compelling data from the Australian Prudential Regulation Authority (APRA) to show that claims numbers and claims costs had begun to rise dramatically by 1998, leading to the environment in which tort reform was undertaken.”

Mr Mason says insurers did not ask governments to fix their commercial problem. “They did what any business must do to remain viable – they withdrew from unprofitable areas or continued to increase prices to match the increase in claims costs and to stem losses.”   

He said it is wrong to suggest that profits recently announced by insurers were due to tort reform. “APRA statistics show public liability represents just 7.7% of insurers’ total revenue – hardly a figure on which to build company profits.    

“The insurance industry strongly believes that these reforms are working and that they strike a balance between the right of injured people to receive proper compensation and the ability of the community to have access to affordable insurance cover.”