The Insurance Council of Australia’s (ICA) submission to a Law Reform Commission of WA discussion paper on the introduction of provisional damages says provisional payments should only be available for claims relating to asbestos and dust diseases with long latency periods.

The paper was released by the commission last November. Although initiated largely in relation to asbestos claims, proposed reforms are discussed in the context of all personal injury claims.

The commission has indicated its preference for modifying the “once and for all” rule of damages in WA through the introduction of provisional damages.

Provisional damages would be available in cases where there is a chance of a different injury or disease arising after the initial judgement or settlement.

ICA warns modifying the “once and for all” rule would create “significant challenges and uncertainty” for insurers in relation to their prudential reserving requirements and ability to efficiently manage and finalise long-tail claims.

It acknowledges the rule can lead to unjust outcomes for asbestos and dust-disease sufferers due to the “latent nature” of these conditions and the propensity for sufferers to develop fatal and more serious secondary illnesses many years after initial diagnosis.

“In these circumstances, the case for allowing provisional payments for these claims may be justified,” ICA says. “Outside of claims relating to asbestos and dust diseases, there should be no modification to the ‘once and for all’ rule.”

ICA warns modifying the rule across all personal injury claims will have adverse consequences, including increased legal costs; removal of finality and financial certainty for all parties to a litigation, including insurers; the impact on insurers’ ability to manage and settle long-tail claims; increased underwriting risk arising from multiple claims; and higher insurance premiums.