The Insurance Council of Australia (ICA) has lashed back at a consumer organisation’s claim that insurers’ record profits are a result of recent Federal Government tort reforms.

Last week Christian Leavesley, a spokesman for Melbourne-based People’s Rights, told Sunrise Exchange News that insurers are “keen to run” from their responsibilities to consumers. He said insurers’ claims that windfall profits do not stem from legislation to reduce compensation rights could allow them sidestep their obligation to reduce premiums.

But in a letter to the Australian Financial Review, ICA Deputy CEO Dallas Booth said Mr Leavesley has ignored the fact that the Australian insurance market is not mainly made up of public liability business. “The Australian Prudential Regulation Authority statistics for the year to September 2003 show public liability represents just 6.7% of net premiums, hardly a figure on which to hang an entire company’s or industry’s profit.”

Mr Booth said that after the losses associated with September 11 and HIH, insurers withdrew from unprofitable areas and raised premiums across the board. The industry didn’t need tort reform to boost profit. “Prices continue to be monitored very closely by the Australian Competition and Consumer Commission.”