Suncorp has called on states to introduce government-underwritten no-fault catastrophic injury schemes.

In a white paper called Beyond Fault – Progressing to Universal No-Fault Cover for Catastrophic Motor Injuries, the insurer welcomes the adoption from July 1 of no-fault cover for all drivers in SA and the ACT, but emphasises the need for public sector involvement nationwide.

“The underwriting and care of catastrophic injuries by the public sector reduces the need for private sector insurers to retain capital,” the report’s author, Suncorp Commercial Insurance EGM Statutory Portfolio Chris McHugh, says.

“Put simply, it is generally more expensive for motorists to have their catastrophic care underwritten by private insurers.”

Compulsory third party (CTP) schemes in NSW, Victoria, Tasmania and the NT currently provide no-fault cover for catastrophic injuries from motor accidents.

Queensland and WA have at-fault CTP schemes.

“In at-fault CTP schemes, injuries to the driver or rider are not covered by the insurance policy attached to their motor vehicle, which has a profound impact when people suffer catastrophic injuries,” Mr McHugh says.

One catastrophic injury patient can cost a lifetime care scheme millions of dollars over decades, he says. In Queensland, the most serious injuries represent about 0.2% of all claims but account for about 10% of total claims costs.

Care is generally the largest component. An individual might be paid $900,000 in lost income, $300,000 in pain and suffering compensation and $4.5 million in care.

Mr McHugh says the transition to no-fault cover is a key principle of the National Injury Insurance Scheme and brings a clear social benefit.

“When all jurisdictions have implemented no-fault cover for catastrophic motor injuries, Australians will have the reassurance that, whatever side of the border they crash, they will be properly looked after.”

The Australian Prudential Regulation Authority requires private insurers to hold enough capital to pay future claims costs, with adequate buffers, and the amount needed to cover high-cost, long-term, volatile risks is substantial.

“The public sector is not subject to the same… requirements and, due to the strength of a state government’s balance sheet, is better placed to underwrite high-cost, long-term, volatile risks of this sort,” the Suncorp paper says.