Injured Persons Association


About Compulsory Third-Party Insurance (CTP)

When was compulsory third-party insurance introduced and why?

The Motor Vehicle (Third-Party) Insurance Act became law in 1942. As the use of motor vehicles became common, so did accidents in which people were injured. However some motor vehicles were not insured against damages claims by accident victims. So this law was introduced to require every vehicle to be insured.


What is the origin of injured people being able to sue to recover damages?

In the United Kingdom, a lot of the laws were developed by the courts on the basis of what was fair and those laws became part of Australian law. This is what is known as the common law. In 1932, in the celebrated case of Donoghue v Stevenson, the English House of Lords determined that Mrs Donoghue, who suffered injury when she drank a bottle of ginger beer containing a snail, was entitled to recover damages from Mr Stevenson who manufactured the ginger beer. The court held that the manufacturer owed a duty of care to her which was breached because it was foreseeable that failure to ensure the products safety would lead to harm of consumers. This principle was quickly extended to cover motor accident victims and work accident victims. It is known as the law of negligence.


Has the right of injured road users to claim damages for negligence existed ever since 1942?

Yes except for a period of about 18 months in 1987/1988 when Transcover was introduced.


What was Transcover?

This law passed by the Unsworth government abolished the right of injured road users to claim damages for negligence. Instead they were given statutory rights to certain defined benefits. Those statutory rights included the right to a weekly payment for loss of earnings throughout the persons working life.


What happened to Transcover?

In 1988 the Greiner government set up the Transcover Review Committee. The Committee recommended the abolition of Transcover and the restoration of the right to claim damages. That right was modified to exclude minor claims for pain and suffering. This became known as the Motor Accidents Act.


What has happened since then?

The right of injured road users to claim damages the negligence has remained since that time, although it has been modified from time to time. This happened most notably in 1999 when the Motor Accidents Compensation Act became law. After that time 90% of road users lost their right to claim damages for pain and suffering, although they still retained their right to recover all of their lost earnings, medical expenses and the cost of care. The change was made by providing that damages for pain and suffering were only payable if the injured road user was assessed as having more than 10% whole person impairment under a table of maims. Although 10% sounds low, the medical tables mean that it is in fact a high threshold and 90% of injured road users don't reach this threshold.

How is the claim for damages resolved?

The motor accident insurers, who collect the green slip premiums, are experienced, as are the lawyers who normally represent accident victims. The vast bulk of claims are settled by agreement.


What happens if the claim is not settled?

In the old days these disputes all went to a judge for hearing. That was a formal process. Witnesses were called to give evidence and they were cross-examined. Documents were tendered. The judge then made a decision. Very few claims are resolved that way now. Any disputed claims now go before a CARS assessor – an experienced practising lawyer appointed by the Motor Accidents Regulator. That assessor conducts an informal hearing which usually takes only two or three hours. Witnesses are not cross-examined. In fact usually the dispute is resolved by the assessor simply looking at the documents given to him or her by each side. Whilst there can be an appeal to a judge, in practice there are very few such appeals.


Doesn't it take a long time for claims to be resolved?

This depends on the nature of the injury. Some injuries resolve quickly and the damages claim can be resolved quickly also. Serious injuries however often take 12 to 18 months before the condition has stabilised enough for a doctor to be able to determine the long-term outcome. Sometimes it takes even longer to find out what effect this will have on the injured person's ability to return to work. Once the condition has stabilised then an appointment can be made for a MAS assessor – a doctor appointed by the motor accidents regulator (SIRA) – to determine the degree of permanent disability. Until that happens the claim can't be referred to a CARS assessor if it hasn't settled.


How is a claim for past loss of earnings worked out?

The accident victim recovers all of his past loss of earnings. Sometimes it's just a matter of comparing what was being earned before the accident to what was earned afterwards. Sometimes it's a bit more complicated because the accident victim might have been about to get a promotion, or may have been running a business which was expanding. The object is to put the accident victim back in the same position he or she would have been in had it not been for the negligence. If the matter has to be determined by an assessor, the assessor is able to look at all the evidence to determine what is a fair amount to replace the lost income.


What about a claim for future loss of earnings?

This is often a bit more complicated. An assessment has to be made as to what work the accident victim would have done during the balance of working life and what income would have been produced. That has to be then compared to what income the accident victim is now likely to earn during the balance of life, following the injury. Again it's a question of fairness – putting the accident victim back in the position he or she would have been in had it not been for the negligence.


What about the cost of medical expenses and care?

Again the object of the exercise is to work out the actual cost to date and the likely cost into the future so that the accident victim is not out of pocket.