The Gazette 1987

GAZETTE

JU LY/AUGUST

1987

With regard to foregoing and in the light of the recent difficulties at ICI and the PMPA, both now under administration, I believe that the Government, at this point in time, has an excellent opportunity to scrutinize the performance of the insurance industry generally. In this regard I believe the time is par- ticularly opportune for the Govern- ment to consider alternative systems of motor accident and oc- cupational injury cover and com- pensation. In particular, the concept of "No Fault Insurance" might prove at- tractive in a country such as our own. "No Fault Insurance" briefly means that all insurees of a par- ticular class cover themselves with insurance and in the event of an ac- cident are compensated by their own policy irrespective of whether or not they caused the accident. This concept of insurance has been adopted in New Zealand and certain states within the United States where it has proven itself popular, efficient and most impor- tant, cost effective to policy holders. The system as adopted in New Zealand is particularly ap- propriate for consideration by this country. Having a similar climate, similar level and density of popula- tion, similar communications infra- structure and having inherited a similar system of law and com- merce to our own, that country has embarked on a radically different approach to the problems surroun- ding accident and occupational in- jury compensation. As a result of a Royal Commis- sion established in December of 1967 and usually referred to as " The Woodhouse Repo r t ", it became clear that the problem of industrial injuries was impossible to resolve in isolation but had to be dealt with by way of reference to associated relevant matters (i.e. motor and general occupational in- jury cover). The report entitled "Compensa- tion for Personal Injury in New Zealand" stated: "We have made recommendations which recognise the inevitability of t wo fundamen- tal principles. 1. No satisfactory system of injury insurance can be organised ex- cept on a basis of community responsibility. 2 .Wisdom, logic and justice shall require that every citizen who is

injured must be included, and equal losses must be given equal treatment. There must be com- prehensive entitlement. Moreover always accepting the obvious need to produce something which the country can afford, it seemed necessary to lay down three further rules, which, taken together with the t wo fun- damental matters, must provide this framework for a new system. There must be complete rehabilita- tion. There must be real compen- sation — income related benefits from income losses, payment throughout the whole period of in- capacity, and recognition of perma- nent bodily impairment as a loss in itself. Also there must be ad- ministrative efficiency." The report labelled negligence actions as a form of lottery. It described the adversarial system as hindering rehabilitation and as being cumbersome, erratic and ex- travagant in operation. 1 (Words not inapt at times when applied to our own system for obtaining com- pensation.) As a result of the Woodhouse recommendations The Accident Compensation Act became law in 1972 establishing t wo schemes: 1. An occupational injury claims scheme for wage earners; 2. A motor vehicle accident scheme. In each case all workers and road users were levied at source. In this country this can be envisaged as paying ones insurance premium through tax and ones car insurance premium through road tax. A com- mission was established to ad- minister the two schemes. The schemes have been enlarged to take into their net all citizens of New Zealand to include house- wives and members of the armed forces. Visitors to New Zealand were automatically entitled except in cases of sickness. The Accident Insurance Corporation has now taken over from the Commission. The scheme provided for a relatively small maximum lump sum benefit (f 1 7 , 0 00 New Zealand pounds in 1983 ; , 2 ir- respective of the na: re of the in- jury. In addition, it offered a non-taxable "dependancy" income into the future where death had occurred. 3 Permanent injury vic- tims receive in addition a weekly compensation on an earnings

related basis. Temporarily injured victims receive a similar com- pensation during the term of their incapacity. The Accident Compensation Corporation became in effect a semi-state insurance body which was self financing. It obtained its revenue partly from a Government grant but mainly from levy revenue and other investment income. Dur- ing the early years of its existence it consistently earned more money than it paid out in compensation to accident and occupational injury victims. Indeed, it appears to have conducted its financial affairs so successfully that, it built up healthy reserves and became effectively in- dependent of Government funding. In the statement of account balances for the year ended 31st March, 1985 the report of the Ac- cident Insurance Corporation records that under the earners fund a total income of £199,953,000 was generated with total compen- sation of £202 , 382 , 000 paid out. 4 Under the motor vehicle account £57,374,000 was earned against the sum of £69,855,000 dis- charged in compensation. 5 Neither of these sets of figures disclose the hidden income of the Cor- poration derived from the use of money received in premiums from subscribers to the scheme. The Accident Compensation Act introduced a scheme of " no fault" insurance to New Zealand. This modified but did not eradicate litigation arising out of accident and occupational injury claims, as the issue of quantum always remained in dispute even though the issue of liability was dispensed with. In the context of our own system, it would appear to have the effect of reducing a hearing on liability to one of assessment of quantum only. Lawyers therefore continued NEWTOWN MT. KENNEDY Pr emi ses T o Let A newly renovated town house of character available for solicitors practice. House features panel doors, double glazing, sound proofing, phone, multiple electric socket outlets. For details and viewing Ring 8 1 9 2 2 7 / 8 1 0 0 29

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