A senior insurance industry executive says Australia should consider introducing a statutory scheme for public liability insurance.
Prateek Vijayverjia, Xceedance Business Leader – Key Accounts Australia, says the hardening market means many organisations cannot afford or find appropriate public liability insurance.
He suggests a public liability scheme, similar to compulsory third-party (CTP) motor vehicle and workers’ compensation insurance schemes, needs to be debated.
“Given more than two decades have passed since there was major tort reform in Australia, it is opportune to re-examine current legislation and whether it is fit for purpose,” Mr Vijayverjia says.
“CTP and workers’ compensation schemes have provided genuine reform that has helped people rehabilitate and reduced adversarial litigation. That compares with the possibility of waiting for the judicial system to establish damages years after the event.
“While not perfect, the CTP models are generally accepted as being much better than the alternative – litigation – and they put money into claimants’ pockets faster,” he says.
“Likewise, workers’ compensation schemes meet more of the community’s needs and in a more equitable way.”
Mr Vijayverjia says the complexity of the public liability ecosystem is a barrier to equitable outcomes because “only the sophisticated can navigate it and must fund themselves through the court processes”.
Market volatility is another negative that works against the need for rational pricing.
“Insurers enter and exit the public liability class, depending on factors such as competition and a softening market. When they withdraw, market gaps are exposed, leaving organisations and the public potentially at risk.”
Mr Vijayverjia says a statutory scheme would provide greater certainty for underwriters and help injured people return to normality quicker, with an emphasis on rehabilitation not just compensation.
He admits implementing a statutory public liability scheme would not be simple or easy.
“Achieving consensus on a nationwide scheme is unlikely, but if just one state took the lead, other jurisdictions may well follow when they observe the benefits,” Mr Vijayverjia says.
“For insurers, any structural reform to public liability insurance would be a major change to operating systems and IT, but they have demonstrated an ability to respond to many structural reforms in the past.”
Mr Vijayverjia says insurers can work with a trusted partner like Xceedance to achieve business process optimisation and implement the intelligent technology required for transformation.
“It’s clear that public liability insurance is essential to keep the wheels of commerce turning and protect injured people. However, it needs to be sustainable, affordable, and delivered efficiently. A statutory scheme may be the answer to achieving those goals,” he says.
Martin Jones, Xceedance Business Leader – Key Accounts Australia, has written a detailed paper to open the debate on a statutory public liability scheme for Australia, which is available here.
Media contact: Kate Tilley, Kate Tilley Journalism Pty Ltd
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Xceedance provides strategic operations support, technology, and data services to drive efficiencies for insurance organisations worldwide. The company helps insurers launch products, implement intelligent technology, deploy advanced analytics, and achieve business process optimisation. For more information, visit www.xceedance.com.