Posted 28/5/04

Insurers' profits soar while taxpayers count the cost

As predicted, restrictions on injury compensation payouts have delivered a huge boost in insurance company profits and a crisis in public hospitals that governments are finding impossible to fund.

Accident victims used to be able to get private medical help paid for by the reckless person's insurance company. Now, private medical treatment is now denied to most accident victims. This is the result of Civil Liability laws that excuse law-breakers from responsibility.

The new laws shift the cost of the damage away from the at-fault person and their insurer, to the victim and the taxpayer. This has meant a rush on public hospitals as accident victims seek medical help from the only places they can afford.

But as taxpayers count the increasing cost of caring for accident victims in the public system, all four Australian insurers have boasted record profits.

In March, QBE posted an annual profit of $572 million on a wave of premium increases and "no large claims". Suncorp stunned with a jump in annualised profit to a record $562 million. IAG is also swimming in cash with a 500% profit increase to over $600 million and Promina Insurance announced a $298 million profit.

It was the insurance industry that waged a fear and misinformation campaign to convince law-makers to rush through Civil Liability laws without proper debate. They argued that 'increased litigation' was the cause of industry problems that have since been blamed on entirely different factors. Their stunning victory secured an 80% reduction in the number of injury claims they previously had to pay.

Consumers and taxpayers are in reality subsidising the big end of town who are revelling in massive salaries for insurance executive, surging share prices and huge dividend cheques.

Although insurers refuse to reduce inflated premiums and are clearly embarrassed by their sudden surge in profits, the politicians who were so eager to sell consumers' rights down the drain have yet to face the music for the debacle they allowed.

As the public hospital scandal escalates, the foolishness of exempting wrongdoers and their insurers of accountability for the cost of injuries they inflict, will become clearer even to those previously blinded by anti-consumer prejudice.