Despite assertions by the legal fraternity that insurers are cashing in on tort reform, the introduction of tort reform hasn’t been all smooth sailing for the industry. Lawyers have become smarter in the way they present cases, which has exposed loopholes and presented more issues for insurers.

Lori Callahan, Allianz Australia’s National Manager Liability Claims, told delegates at last week’s ICA NSW conference that since the introduction of tort reform plaintiff lawyers “now have more time to spend on bigger claims”.

Talking about the effects of tort reform in NSW, she said district courts are being generous towards plaintiffs, which means more insurers are being forced to appeal decisions. She said appeals are then taken to the NSW Court of Appeal, which is “pushing for settlement rather than hearings”.

“Appeals are expensive and they don’t guarantee access to higher courts,” she said.

It’s for this reason Ms Callahan says insurers need to weigh up whether it’s financially worth appealing a decision or whether they should just adhere to a settlement.

Ms Callahan says the “creativity of plaintiff lawyers” has led to a surge of psychological claims in the courts. In order to overcome NSW’s 15% threshold for personal injury claims, she says lawyers are urging plaintiffs to “top up the threshold” with psychological claims.

She said a common example of this creativity is dog bite victims. A dog bite victim might not be able to “make the threshold” through medical costs, so psychological claims can be used to beef up the case.

“The man may say he can’t function because of the dog bite,” Ms Callahan said. “He can’t go to work because he’s afraid he’ll encounter a dog when he leaves the house. He can’t leave the house to get food because he’s scared he’ll see dogs.”

She says the consolidation of plaintiff law firms means they have become very sophisticated in their knowledge of how to get around the law, she said. “They know how to use the psychological angle to get around claims.”