A Law Council of Australia (LCA) report which says industry profits are at a 10-year high has added fire to the tort reform battle, with the lawyers once again pushing for more compensation for personal injury victims.

Despite the fact that the Australian Consumer and Competition Commission (ACCC) – which has been monitoring public liability premiums for some time – and the Federal Government have praised the reforms, the LCA has used a specially commissioned report to have another swing at the insurance industry.

The report, compiled by Sydney actuary Robert Cumpston, says insurers’ returns on capital were 23% in the six months to December last year. But insurers and analysts say this was mainly due to the benign claims environment and positive investment conditions, not the result of the flow-on effects of tort reform.

The report also claims the profits are high enough to allow better benefits to the injured, and calls for the Australian Prudential Regulation Authority (APRA) to publish more comprehensive information for legislators.

And the fact that analysts say that the reforms won’t have a substantial effect on insurers’ bottom lines for some time doesn’t ring true to the LCA either. Lawyers continue to push the same line they’ve been using since tort reform was introduced – that insurers aren’t passing on the benefits of the reforms to their clients. But if the insurers aren’t receiving the flow-on effects of the reforms yet, how could they be expected to pass on the benefits?

A number of local insurers have already cut premiums by a substantial amount despite the fact that most say they aren’t receiving benefits from the reforms yet – but this is another factor that the LCA hasn’t acknowledged.

The figures – which contradict the ACCC’s report findings that premiums for public liability had fallen by 15% – have understandably fired up the industry.

Insurance Council Australia spokesman Rod Frail says the report is a case of “getting carried away with a calculator”.

He says the report focuses on long-tail classes of business where profits will only be known in two to four years and as such is “based on a series of broad assumptions”.

He says the industry should not apologise for strong profits. “Capital markets will not support poorly performing companies, and the only way insurers can provide security to the community is with strong capital backing.

“Rather than premature extrapolations, Mr Cumpston would be better to wait for the comprehensive APRA database to develop over the next few years to show the true picture,” Mr Frail said.