Proposed changes to Victoria’s personal injury laws are likely to increase the size and number of insurance claims lodged, according to the Insurance Council of Australia (ICA).

“These factors could very likely have a marked impact on the affordability of insurance premiums,” CEO Rob Whelan says in a submission to the Victorian Competition and Efficiency Commission.

The planned reform follows an inquiry that found changes to the Wrongs Act a decade ago increased access to cover and cut premium costs but also led to complaints of people missing out on “fair” compensation.

The Act covers compensation claims for incidents such as slips or falls in public places and harm from medical treatment.

The latest reform includes changes to psychiatric injury thresholds and the way spinal injuries are assessed for non-economic losses.

A recent report by the commission proposed an increase in the cap on non-economic loss to $539,000.

“The draft bill increases the maximum amount payable further to $571,080, which is a significant increase on the existing cap,” Mr Whelan says in the submission.

This is likely to affect premiums, he says.

Damages may also be widened, in limited circumstances, for loss of capacity to care for others.

Such an expansion “will almost certainly increase the average claim size, which could have an impact on the affordability of insurance premiums”, ICA says.

The draft proposals reduce the impairment threshold for access to damages for psychological injuries from “more than 10%” to “10% or more”.

This will probably result in more claims being lodged, which could affect total claims costs, Mr Whelan says.

ICA’s response is partly based on a Finity Consulting report on the commission’s modelling assumptions.

Submissions on the draft proposals close on January 17.