Sharing the Burden of Catastrophic Injury

With the objective of overcoming the imbalance between the benefits potentially available to a significant minority of those injured on the roads by reason of the fault of others and those for whom a claim for damages is not available, the Catastrophic Injury Scheme has been conceived and a Green Paper recently released by the Insurance Commission of Western Australia.

The idea of no fault insurance cover for those who suffer catastrophic injuries in motor vehicle accidents is of course nothing new, as similar schemes are already operating in other States.

The context in which it is to be viewed is best illustrated by the statistics that show some 92 people annually are likely to suffer catastrophic injury as a result of a motor vehicle accident in WA, some 48% of whom will be ineligible to claim damages.  The Scheme is intended to provide enhanced benefits to that 48% and is to operate under the continued auspices of the ICWA.

The model to be adopted for the Scheme is not yet decided, and there are 2 principal options for providing the benefits.  The Green Paper acknowledges that the adoption of a scheme is not a foregone conclusion and therefore postulates three options.

Option 1            no change to the existing CTP coverage;

Option 2            a no fault catastrophic CTP insurance scheme for all people catastrophically injured, (including those who would have otherwise brought a claim for damages);

Option 3            a no fault catastrophic CTP insurance scheme for those catastrophically injured people not covered by the existing CTP scheme (the 48%);

To cater for either options 2 or 3, an increase in annual motor vehicle registration/insurance fees in excess of $100 will be required.

That is a sufficiently substantial increase to have a political dimension.  However in considering the value to be gained, it may be noted that some 50% of all payments presently made under the CTP scheme (some $260,000,000 annually) are paid in relation to catastrophic injuries.

The features of the alternative models presently giving rise to debate include the following:

      • The definition of catastrophic injury;
      • The principle that the introduction of a new scheme should not disadvantage those who would otherwise have entitlements under the existing CTP scheme (leading to support for option 3);
      • Whether there should be exclusions with respect to entitlement under the new scheme, such as relating to criminal conduct, driving under the influence of alcohol, driving without a licence and others.  A view in opposition to this would be that such exclusions are antithetical the concept of a no fault scheme;
      • The management of issues arising from apportionment of liability under option 3 (care costs would in any event be excluded);
      • Depending on funding arrangements within ICWA, whether any issue of recovery of benefits paid under the Scheme would arise where fault and a legal liability were established;
      • The qualifying criteria under option 3; and
      • Lump sum compensation for future care costs under option 3.

Tragically, the likely impact of the proposed Scheme was sharply illustrated recently when the damages claim of Warrick Proudlove was dismissed after trial in the District Court.  Warrick suffered brain damage resulting in the need for 24 hour care, when in July this year, the car in which he was travelling collided with a horse near Mount Barker.

The District Court found that the accident had been unavoidable and not due to the negligence of the driver of the car.

The significance of the decision of the court is that Warrick’s family will continue to bear the cost of care and medical treatment, other than what would be available to a public patient.  Under a no fault scheme an enhanced range of such services would be likely to be available to a victim of catastrophic injury such as Warrick.  It’s pretty hard to argue with that.

For more information on this update or any other insurance matter please contact Vidal Hockless on (08) 9321 3755.

The information published in this paper is of a general nature and should not be construed as legal advice. Whilst we aim to provide timely, relevant and accurate information, the law may change and circumstances may differ. You should not therefore act in reliance on it without first obtaining specific legal advice.