The forthcoming National Injury Insurance Scheme provides a “rare window of opportunity” to reform personal injury cover, according to Suncorp EGM Statutory Portfolio Chris McHugh.

He says introducing no-fault structures with defined benefits and an emphasis on rehabilitation will benefit injured people and reduce cost volatility.

In a new research paper Mr McHugh addresses issues of pricing, coverage and claims in compulsory third party (CTP) schemes.

He says at-fault systems leave “significant numbers” of injured drivers vulnerable because they are covered only if another driver is found to have caused a crash.

“Unfortunately, thousands of Australian families know from first-hand experience the devastating impact of being injured in a car accident without cover for the injuries suffered,” the report says.

No-fault schemes can speed the rehabilitation process by avoiding delays associated with determining fault.

They also promote choice, as opposed to at-fault schemes, where the responsible driver’s insurer will handle the claims of all injured people.

“It’s luck of the draw as to who manages their rehabilitation and provides compensation through the insurance claim.”

With no-fault systems each driver is covered by their own insurer.

Schemes should find a balance of risk and community rating “to ensure affordability with a degree of fairness”, and uncertainty about benefits should be minimised to encourage people to recover, the report says.

Failing to implement reform “can lead to schemes quickly becoming financially unsustainable”.

Consequences include “ballooning insurance premiums, a declining proportion of every dollar ending up in the pocket of injured people, inadequate compensation for motorists and massive losses for underwriters”.

Mr McHugh told insuranceNEWS.com.au that while there is clearly an added cost with a no-fault scheme – more drivers are covered – there are savings to be made too.

He says no-fault schemes can reduce the costs associated with disputes, and when combined with a defined benefits structure setting clear parameters around particular types of injury “we can give improved coverage at a lower cost”.

The proposed NSW reforms are “on the right track”, Mr McHugh says. He understands the delays in pushing them through.

“We would like the scheme to progress but we understand the complexities associated with reform of this scale.”

The introduction of the National Injury Insurance Scheme should encourage all states and territories to review their schemes, and the more consistency nationwide, the better, he says.