Media Release
Injured motorists lose as Government rejects CTP review recommendations
01 July 2019
The Law Society is disappointed that several of the recommendations of the Social Development Committee’s review into the CTP scheme have been rejected.
Ever since radical changes to the CTP scheme were proposed in 2012, the Society warned against measures that would severely reduce, and in many cases, eliminate, compensation for injured motorists.
Nevertheless, the new scheme was implemented in 2013 (albeit with some changes that made it slightly less draconian) with a legislative requirement that the scheme be reviewed within three years.
Within a year of scheme coming into force, it became clear that legitimate accident victims were being short-changed, just as the Society had predicted.
Last year, the Social Development Committee began its review of the scheme. The independent review made recommendations to make the scheme fairer for injured motorists. The recommendations included:
• A review of the Injury Scale Value for the assessment of non-economic loss and that the Injury Scale Value be revised from an ISV that exceeds the value of 10 down to an ISV that exceeds 5.
• Revise the Injury Scale Value for the assessment of economic loss from an ISV that exceeds 7 down to an ISV that exceeds 5.
• Review the fairness of the 20% reduction in compensation that is automatically applied to the assessment of economic loss.
Last week, the Government formally rejected these recommendations, among others.
The Government response it bitterly disappointing because, despite advice from legal professionals who work at the coalface of motor accident injury cases, and despite an independent review which clearly identified flaws in the current scheme that ought to be corrected, such advice has been ignored and the Government have persisted with an inherently unfair scheme.
“The threshold that an injured motorist must meet to be eligible for any compensation for pain and suffering (non-economic loss) is so harsh that a number of victims with ongoing impairments are cut out of the scheme,” Law Society President Amy Nikolovski said.
“The 20% reduction that is applied when calculating compensation for loss of income (economic loss) is arbitrary and patently unfair.”
“From the very beginning, the Society raised concerns about the motivation of the then Labor Government for gutting the scheme.”
“It became apparent that the then Government wanted to make the scheme attractive to commercial insurance providers and privatise the scheme so that Treasury could acquire the Motor Accident Commission’s $2 billion in assets that it had accumulated since running the CTP scheme.”
“We know that the average amount of compensation being paid, and the number of injured people filing claims, has dropped dramatically,” Ms Nikolovski aid. “This is because the bar to be eligible for compensation is so high that for many victims it is not worth applying for compensation. The process to lodge a claim has also become significantly more complex, which is deterring genuinely injured people from seeking compensation.”
“The main objective of a CTP scheme should be to adequately provide compensation to injured motorists,” Ms Nikolovski said. “It should be a revenue neutral scheme. Even before 2013 when the scheme was much fairer, it was operating at a huge profit.”
“We expect that the parties who now benefit most from the scheme are the insurance companies, although the Government has never disclosed the agreement between the Government and the insurance providers. As taxpayers who pay our premiums to fund the scheme, we have a right to know how much money is going towards paying compensation and how much is going to the insurance companies.”