On a Collision Course?

The NSW State Government released its CTP Reform Position Paper last week, as has already been reported in this paper. In it, the government announced its intention to implement a "hybrid no fault scheme". So what does this mean, and why do we care?

I don't suppose many of us stop to think about green slips, other than as an expensive necessity of owning a car. It's worth remembering however that the funds taken from paying for green slips are intended to be applied as compensation to road users who are injured in motor vehicle accidents.

The current scheme is a common law (or what has been described as a "fault based") scheme. Any road user who is not at fault can claim, as can a driver was partly at fault, and blameless accidents (such as where the driver has a heart attack) will also be paid. Another categories include children and close relatives of those killed in an accident where another driver is at fault.

Claims under the current scheme can be for economic loss (treatments expenses, lost wages, etc) and for those with a degree of permanent impairment of over 10%, non-economic loss (also known as "pain and suffering").

What the government is now proposing is that "low severity" injuries will no fault. Those suffering those types of injuries in the new scheme would be entitled to a defined benefit for a maximum of five years, being percentage of their pre-accident income. The income will be capped in the same way that workers compensation is capped (at present $2,042.80 per week). Medical expenses for "low severity" injuries will not be paid after five years, and care costs after two years.

For those suffering permanent impairment of over 10%, common law (or "at fault") remedies will still apply, with non-economic loss available (but capped as currently at $511,000), and past and future loss of earning also still available, but with a lower cap than currently.

The aim is said to be to reduce green slip costs, make worthy claims quicker and easier, and reduce the number of fraudulent claims. The worry is that a number of people whose valid claims are now paid by insurance companies (eventually) will be forced onto reduced Commonwealth benefits after five years.

It's not the law just yet, and the devil will be in the detail – stay tuned.