Law reforms addressing psychological injuries, worker-to-worker claims, and leisure and recreational risks are urgently needed as businesses battle rising liability cover premiums, according to the Insurance Council of Australia.

A white paper released today says state-based civil liability laws that have not been reviewed in almost 25 years are driving up costs, particularly affecting live music venues, festival operators, caravan parks and amusement venues.

“Insurers have been working with businesses facing affordability pressures and challenges accessing insurance, but it is clear improvements to civil liability settings are needed to ensure they remain fit for purpose,” ICA CEO Andrew Hall said.

The report says the federal government should lead a national tort law and civil liability review that examines the ability of SMEs and non-profits to access insurance.

It makes recommendations on limitation periods, claim farming, dangerous activity definitions, non-economic loss damages, worker-to-worker scenarios and claims for psychological injuries and third-party nervous shock.

Night Time Industries Association CEO Mick Gibb says inaccessibility and unaffordability of public liability insurance poses a grave risk to live performance venues. 

“Without these venues, we risk losing a sector that is worth more than $188 billion to the Australian economy,” he said.

The report says the time frame for personal injury claim notifications is increasing, while drawn-out processes can be tactical and increase costs.

It proposes tighter rules on claims brought more than three years after an injury and says lawyers should flag an intended claim within three months of being retained.

Where physical and mental injuries exist, damages should be assessed in a common law claim as the greater of the two.

The report notes a rise in nervous shock claims by third parties, giving the example of an elderly hospital patient’s death that led to claims from the spouse, four children, their spouses, all grandchildren and the girlfriend of a grandchild.

The report says civil liability legislation should impose a higher threshold for claims, or amendments could exclude common law compensation for nervous shock for a third party who has not sustained the primary or initial injury.

ICA says reforms that followed a 2002 review have been eroded due to expansive judicial decisions, a more litigious society, active plaintiff lawyers and rising claims costs, particularly around psychological injuries.

The paper is available here.

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