Page 32 - Week 01 - Tuesday, 12 February 2008
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to a more generous timeframe. But it is quite deliberately a tight timeframe. It is deliberately crafted and designed to encourage somebody that seeks compensation as a result of a motor vehicle accident to begin the process so that they deal directly with the insurer. We have already compared the way in which insurance traditionally operates in the ACT as opposed to the more enlightened CTP regime which currently prevails in New South Wales and, most particularly, Queensland.
In my closing remarks I made the point that in Queensland 45 per cent of all people seeking compensation deal directly with an insurance company. It is the direct dealing with the insurance company, the early settlement of claims, which actually reduces those administration costs. Eighty per cent of all administration costs or fees charged by an insurance company and passed on to the consumer and society relate to just 20 per cent of claims; 20 per cent of administration costs relate to the other 80 per cent. It is the small claimants with small claims who go directly to a lawyer and become embroiled in a very legalistic time consuming and incredibly expensive process for the settling of small claims that produce that 80 per cent cost to deliver 20 per cent of compensation.
The statistics are dramatic. In the ACT, under the current regime, 99 per cent of all people who claim compensation as a result of a motor vehicle accident employ or engage a lawyer. In Queensland, only 55 per cent of people who seek compensation as a result of a motor vehicle accident engage a lawyer. It is that differential to which the costs to the ACT community, as expressed through premiums, are essentially attributable. Ours is a legalistic, court bound process. It is hard to avoid sympathy for Mr Mulcahy’s argument, but the reality of cost structures militates against an extension.
It does seem hard-hearted, but all the advice that I have taken from Treasury is that the 28-day deadline is appropriate. It serves its purposes. It is something of a sledgehammer, but in other jurisdictions it works. We should have regard to the experience of those jurisdictions in bringing down the cost to the consumer of compulsory third-party insurance while at the same time maintaining—in a way that other jurisdictions, including, most particularly, New South Wales, have not done—a right of access for all injuries resulting from a negligent motor vehicle accident for all consumers.
New South Wales, as a result of the costs of the system, simply cut it off. They have actually rendered a whole range of injuries arising from the negligence of others not amenable to insurance. We do not want to go there. We believe that this particular revision is a very necessary part of the arrangements that we are putting in place through this legislation. In that context the government will not support the amendment.
DR FOSKEY (Molonglo) (12.18): I will speak briefly. I am inclined to support an extension of time. I think that 120 days is rather a large extension, and to me this points to having a look at how the system operates in other states to get some sense of what is an appropriate time. They both seem a little bit arbitrary in my opinion.
It does, I think, point to the need for the review that is the subject of Mr Smyth’s amendment. What we are doing here is attempting to get best practice in terms of
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