The release of the results of a snapshot survey on the impact of public liability insurance (PLI) premium increases on business suggests that recent tort reform has paid off, says VECCI.

This survey sought to quantify the magnitude of insurance premium changes over the past year, the ease - or difficulty - with which business has obtained insurance, and the overall impact of insurance costs on business performance.

"Among the key findings is that the rate of increase in average public liability insurance premiums paid by business has moderated significantly over the past year. Public Liability Insurance premiums rose by an average of 9.3% over 2003-04 (down from an average 85% increase in 2002-03)", says VECCI Chief Executive Officer, Neil Coulson.

"While a number of influences have no doubt shaped this outcome, it would also appear that the co-operative efforts of State and Commonwealth Government legislative reform has also had a positive effect.

"Governments must continue in their ongoing efforts to ensure insurance remains affordable for Victorian business.

"Tort reform is not about stripping away the rights of an injured person - it is about ensuring those injured are adequately provided for, while balancing this against the needs and expectations of the broader community. The community already accepts this balance in the areas of workers' compensation and transport accident compensation.

"Despite recent protests by some plaintiff lawyers, an unrestrained culture of litigation should not be allowed to return.

"While the adverse effects of escalating public liability insurance premiums appears to be receding, the emerging upward trend in professional indemnity and product liability insurance premiums identified in the survey is of concern. Professional Indemnity premiums rose by an average of 18.2% over 2003-04 and Product Liability Insurance premiums rose by an average of 10.8% over 2003-04.

"VECCI will continue to monitor these developments closely and stands ready to work with Government to explore any further actions that may be necessary to contain the insurance burden on business", says Mr Coulson.

VECCI MANAGER - MEDIA AND RESEARCH, CHRIS JAMES
(03) 8662 5226 / 0417 353 650 / cjames@vecci.org.au

VECCI Business Insurance Survey (October 2004 - Preliminary Results)

Public Liability Insurance

• Public liability insurance premiums rose by an average of 9.3% over 2003-04 (down from an average 85% increase identified in our survey in 2002-03);
  
• Almost 70% of respondents experienced an increase in public liability premiums compared with the previous twelve months (down from 89% in 2002-03); and
  
• Just over 10% of respondents reported that they had experienced difficulty renewing their public liability insurance in 2003-04 (down from almost 28% in 2002-03).

Professional Indemnity Insurance

• Professional indemnity insurance premiums rose by an average of 18.2% over 2003-04;
  
• Almost 33% of respondents experienced an increase in professional indemnity premiums compared with the previous year; and
  
• 7% of respondents had difficulty renewing their professional indemnity insurance in 2003-04.

Product Liability Insurance

• Product liability insurance premiums rose by an average of 10.8% over 2003-04;
  
• Almost 26% of respondents experienced an increase in product liability insurance premiums compared with last year; and
  
• 7% of respondents had difficulty renewing their product liability insurance in 2003-04.

All Insurance

• 7% of respondents reported that increases in their combined business insurance premiums had caused their business significant financial hardship;
  
• Almost 28% reported that increases in their combined business insurance premiums had caused their business some financial hardship; and
  
• Almost 38% of respondents reported that increases in their overall insurance premiums had caused their business no financial hardship.

For all media enquiries, please contact:
VECCI Strategic Communications
Ph:      (03) 8662 5226
email: media@vecci.org.au