Proposed changes to the NSW Compulsory Third Party (CTP) Insurance Scheme will be detrimental to accident victims and their ability to claim compensation. The new scheme, if implemented will strictly limit common law claims to severely injured individuals and will limit claimant’s assess to legal representation.
In March 2016, the NSW Government released a position paper, “On the road to a better CTP Scheme”. Following the mandatory consultations, a further paper was released in September 2016, “CTP reform consultation observations” .
The new scheme proposes that individuals who sustain ‘low severity injuries’ as determined by a Medico-Legal Specialist, appointed by the insurer, will only have medical expenses paid for a period of five years regardless of their capacity to return to their pre-injuries duties. Defined income benefits are set to cover injured persons for 80%-95% of their pre-injury income, reducing over time so as to try and encourage a return to work and will only be paid for a period of 5 years. If these reforms are implemented, it will be essential for road users to take out income protection insurance so as to ensure that they are adequately protected in the event of a motor vehicle accident.
The insurer’s Medico-Legal Specialist, whilst a qualified practitioner, can take a harsher approach and downplay injuries that they consider ‘minor’. Whereas, under the current scheme, both parties obtain reports from Medico-Legal Specialists and if no agreement is reached the matter is referred onto MAS for an independent determination. The new scheme, would not readily allow the claimant to contest the insurer’s determination.
The term ‘low severity injuries’ encompasses all injuries that fall below a 10% Whole Person Impairment. Whilst it is difficult to define what falls under the banner, the impact is to be felt by claimants who sustain, whiplash, soft tissue injuries, muscular back injuries and tendon tears. These injuries are likely to fall short of 10% impairment, despite the future impact on the claimant’s ability to return to work.
Funding for commercial attendant care services will cease after 2 years if the inured persons Whole Person Impairment is less than 10%; and payment will not be made for any assistance provided gratuitously by friends or family.
The NSW Government has attributed the desire to reform the CTP Scheme down to the cost to the everyday road user. Green slip costs have significantly increased over the years and insurers are blaming this on the increase in the number of claims. Upon reform of the CTP Scheme the amount of compensation provided will be significantly reduced due to the limited scope within which claimants will be able to claim. Accordingly, it is anticipated that the cost of NSW Green Slips will be reduced at the expense of injured people requiring access to the scheme.
However, the New South Wales Law Society has conducted a survey which shows 95% of road users want compensation for medical, rehabilitation and care costs alongside a further 80% wanting lump sum payments for pain and suffering. Unfortunately, the proposed reforms provide a very small short term benefit for a significant amount of long term pain.
How would the reforms impact you?
- No lump sum compensation at the end of a claim;
- Your medical expenses will only be paid for a period of five years, regardless of your ongoing need for treatment;
- Your friends and family will not receive payment for domestic assistance provided;
- Funding for commercial attendant care services such as a cleaner or a gardener will cease after two years;
- Payments for economic loss will cease after five years, regardless of your ability to return to your pre-injury occupation;
- Taking out Income Protection insurance is going to cost each individual more than the current green slip insurance costs; and
- Not all claimants will be allowed access to a legal representative. Rather, individuals will be left to fend for themselves against well resourced and highly experienced insurers.
*The above only applies for claimants who have been assessed as having a Whole Person Impairment of less than 10%.
Whilst a reduction of Green Slips prices might sound appealing, the overall detrimental impact of the reforms significantly outweighs the benefits to be provided to road users.