Insurers should be required to disclose transparent and comprehensive data explaining increases in small business insurance premiums or limited access to coverage, the Australian Lawyers Alliance says. 

The ALA says any reform of civil liability laws risks being more an “exercise in cost shifting rather than cost reduction” without better evidence of why premiums are higher. 

Parliament should not legislate based on “unverified causal” arguments from insurers, it says. 

The ALA’s submission to a federal parliamentary inquiry on small business cover follows one by the Insurance Council of Australia stating outdated laws and soaring legal fees are behind SME premium rises.  

The ICA calls for caps on legal costs, and a national review of civil liability laws, pointing to an “active plaintiff law firm and third-party litigation funding environment”. 

But the ALA says data released by insurers to the public so far is not sufficient to illustrate a singular primary reason for rising public liability insurance costs, and says the Joint Committee on Corporations and Financial Services Committee should “require further and wider minimum datasets” before considering any potential civil liability reform. 

Among other recommendations are that the Committee mandate quote and renewal outcome reporting by segment and region; require a regulator-verified decomposition of premium movement; and “compel claims-pathway microdata with cost splits and timing to test narratives about litigation costs, and identify avoidable process costs”. 

It disagrees legal costs are the primary reason for higher premiums, saying “that conclusion is not established with the current publicly available data,” and is demanding “proper evidence” before any changes are made.  

The submission warns against legislative reform without evidence, saying premium movements in liability insurance “cannot be explained by claim numbers or compensation payments alone”. 

"Any changes to current civil liability settings carry a clear risk of cost shifting - in that the costs and inherent risk are shifted onto the individual and the state. The committee should require any underlying cost shifting to be explicitly assessed before any civil liability reforms are considered,” the ALA says. 

Australia’s compensation model is “not unfettered,” the ALA says, with strict statutory thresholds and a high evidentiary bar that mean compensation is reserved for proven, genuine harm.  

Unlike the US, where litigation is more readily pursued and punitive damages may apply, the Australian scheme is directly structured to deter speculative or opportunistic claims, the submission says.  

"It is always for the plaintiff to prove, to the requisite standard, that such losses have been or will be incurred as a result of the fault. Wrongdoers and their insurers generally are not required to prove anything.” 

Civil liability reform would shift the costs of injury away from insurers and wrongdoers onto injured people and public systems, according to the ALA.  

It says a 2002 review chaired by then NSW Supreme Court justice David Ipp showed “insurance access problems were never purely driven by claims and litigation. Parliamentary inquiry work at the time pointed to major global and market drivers.” 

The ALA wants to confer with the ICA to explore mutually agreed prelitigation protocols to promote appropriate early settlements of public liability claims. 

See the submissions here.