The Victorian Competition and Efficiency Commission (VCEC) recently released its draft report into the Wrongs Act 1958 (Vic). In providing a response to the post-HIH collapse liability insurance crisis, the 2002/2003 reforms to the Act imposed a number of limits on damages recoverable by injured plaintiffs. The latest proposed reforms are primarily aimed at making the Act operate more efficiently and equitably including preventing legitimate claims from being denied or undercompensated. As part of its inquiry the VCEC was also charged with ensuring that any changes to the Act would not significantly increase insurance premiums.
The key recommendations of the draft report are to:
- adjust the psychiatric injury threshold to access damages for non-economic loss to greater than or equal to 10% impairment;
- adjust the spinal injury threshold for damages for non-economic loss to greater than or equal to 5% impairment;
- clarify that the cap on damages for economic loss applies to the gap between pre- and post-injury earnings;
- increase the maximum amount of damages for non-economic loss to align with the cap under the Accident Compensation Act 1985 (Vic). If accepted the changes should ensure that injured persons in Victoria will have access to similar damages regimes whether their claim falls under the Transport Accident Act, Accident Compensation Act or Wrongs Act; and
- provide that time thresholds that limit access to damages for gratuitous attendant care are cumulative, rather than alternative. That is, the care required is for at least six hours a week and for at least six months.
The recommended changes to the Act are estimated to increase insurance premiums by up to 4%.
The VCEC notes that the establishment and implementation of the National Disability Insurance Scheme is likely to have a significant impact on the price and availability of public liability and professional indemnity insurance. It forecasts a further review of the Act will be necessary closer to the full implementation of the NDIS, which is expected in July 2019.
It remains to be seen whether, and if so when, the recommended reforms become law. Overall the proposals are mild, and in fact they probably reflect the original intentions behind the original reforms.