Public liability is still the hottest issue on the politicians’ agenda right now, with Federal Assistant Treasurer Helen Coonan slapping down commentators who criticised the Trowbridge Consulting report used at the recent federal/states summit.

In a speech to the ANZIIF national conference on the Gold Coast, she said the community will not accept those taking a “high moral ground” on the issue. “The train has already left. Finger-pointers will soon find themselves in a position of irrelevance in the debate,” she said.

Senator Coonan indicated that despite the high level of concern, the Federal Government won’t do anything extreme. “I am… keenly aware of the dangers of strong-arming insurance companies into under-pricing their products,” she said.

She also dismissed calls to review capital levels currently required under prudential regulation. “Long-tail classes of insurance such as public liability insurance hold significant risks for insurance companies and they must hold capital sufficient to absorb these risks”.

Senator Coonan said her usual line is to find a solution “that balances people’s needs and people’s rights”. Any reforms would have to enable insurance companies “to meet the expectations and demands of the community without undermining their financial viability”.

And the industry should examine the establishment of a co-insurance pool for public liability risks in Australia. She said a co-insurance pool would help group buying schemes as well as deal with the problem of too few underwriters willing to provide cover.

“The insurance industry needs to find a way to ensure that public liability insurance is available to the community at a reasonable price,” she said. “Under a group buying scheme, an umbrella policy is purchased on behalf of a range of organisations. A larger policy is far more attractive to insurers than a large number of small risks and can result in costs savings due to the power of bulk buying.”

Senator Coonan said that besides reforms to payouts, the legal profession needs to improve dispute-resolution processes to make settlements faster and cheaper. She suggested expert neutral evaluation, meditation, arbitration and mini-trials as possible methods.

She also suggested adopting proportionate liability instead of joint and several liability when paying claims. “Proportionate liability divides the loss among negligent parties according to their share of responsibility.”

As for the role of the courts, Senator Coonan said there is a “demonstrated need for legislation to renovate a complex compensation system based on the law of negligence, that is clearly not meeting the needs and expectations of the community”.