The NSW Government – which is recognised as the one that got the personal injury tort reform ball rolling – has released a discussion paper on Premier Bob Carr’s proposal to introduce a lifetime care and support scheme for people who are catastrophically injured in motor accidents but can’t claim compensation.

The Insurance Council of Australia (ICA) has welcomed proposals by the Government to introduce a long-term care scheme for the catastrophically injured, saying injured people deserve lifetime care “regardless of whose fault the accident was”.

The paper proposes the scheme will be funded through a levy on motorists in conjunction with compulsory third party (CTP) insurance. It will require an extra $20 per CTP policy – and the State will also ask the Commonwealth Government for GST exemption for the levy.

ICA Deputy CEO Philip Maguire says the industry fully supports the compensation proposals, which if implemented will each year provide support for an average 37 people who suffer spinal cord injuries, 84 who receive traumatic brain injuries and three with other serious injuries. But he says the council needs to work with the State Government to “nut out” the details of the scheme.

The existing scheme, which was introduced in 1980, is privately underwritten. Mr Maguire says that “since that time, insurers have played an important role in providing initial case management and co-ordinating care and rehabilitation… and so have developed unique expertise in this area”.

“The challenge now is to come up with the details of how the scheme should work in the best interests of injured people and in a way that ensures the scheme is sustainable over the long term,” he said.

The legal fraternity has spoken out against the scheme, saying it will be overly expensive, and land the catastrophically injured in nursing homes and on pensions for the rest of their lives.

Critics say governments favour no-fault schemes because they believe they are cheaper. While they reduce litigation expenses in the short term, such schemes don’t provide a long-term solution. They say the proposal to remove only the long-term care aspect from the total damages award could create uncertainties for underwriters in pricing the residual risk, and courts may shift greater emphasis to other aspects of a person’s injuries.

Lawyers say these scenarios could lead to an increase in the overall cost of claims and administration activity, with increased exposure to the public balance sheet.