CTP reform is on pause

In what is widely seen as another backflip, the NSW government has decided to revisit its radical ideas for CTP reform.

Better Regulation Minister, Victor Dominello has allegedly sent a letter to legal bodies, including the Law Society of NSW and the Australian Lawyers Alliance. It says the government is reconsidering recommendations on containing legal costs. While this was reported in the press, there has been no formal press release.

Deeply unfair

The legal profession has been particularly vocal in its criticism of the suggested reforms. Lawyers claimed the new scheme would be deeply unfair to most accident victims. They would lose legal representation for moderate injuries. Only the most catastrophically injured would have legal representation.

We understand the existing proposal for CTP reform is now “off the table”. As an “interim measure”, the government will introduce legislation to cap legal fees for low-severity injury claims. The government will then monitor the frequency and volume of minor claims to see the effect.

The idea of capping legal fees is to stem the ever-rising tide of legal costs in CTP claims. It should also help to deter people from engaging lawyers long term to make fraudulent high claims.

Fairness test

Dominello said the NSW government is currently developing a fairness test. This will apply to insurance assessors and be a way to curb insurer profits, currently around 19% of every green slip. How this will be done was not explained.

Nobody knew what the Bill for CTP reform would eventually contain. After Dominello’s recent announcement, it is even less clear when a new Bill will be on the table. CTP reform is on pause for now.