The Gazette 1987

GAZETTE

LY/AUGUST

1987

With regard to foregoing and in

the light of the recent difficulties at

ICI and the PMPA, both now under

administration, I believe that the

Government, at this point in time,

has an excellent opportunity to

scrutinize the performance of the

insurance industry generally. In this

regard I believe the time is par-

ticularly opportune for the Govern-

ment to consider alternative

systems of motor accident and oc-

cupational injury cover and com-

pensation.

In particular, the concept of "No

Fault Insurance" might prove at-

tractive in a country such as our

own. "No Fault Insurance" briefly

means that all insurees of a par-

ticular class cover themselves with

insurance and in the event of an ac-

cident are compensated by their

own policy irrespective of whether

or not they caused the accident.

This concept of insurance has

been adopted in New Zealand and

certain states within the United

States where it has proven itself

popular, efficient and most impor-

tant, cost effective to policy

holders. The system as adopted in

New Zealand is particularly ap-

propriate for consideration by this

country. Having a similar climate,

similar level and density of popula-

tion, similar communications infra-

structure and having inherited a

similar system of law and com-

merce to our own, that country has

embarked on a radically different

approach to the problems surroun-

ding accident and occupational in-

jury compensation.

As a result of a Royal Commis-

sion established in December of

1967 and usually referred to as

" The Woodhouse Repo r t ", it

became clear that the problem of

industrial injuries was impossible to

resolve in isolation but had to be

dealt with by way of reference to

associated relevant matters (i.e.

motor and general occupational in-

jury cover).

The report entitled "Compensa-

tion for Personal Injury in New

Zealand" stated: "We have made

recommendations which recognise

the inevitability of t wo fundamen-

tal principles.

1. No satisfactory system of injury

insurance can be organised ex-

cept on a basis of community

responsibility.

2 .Wisdom, logic and justice shall

require that every citizen who is

injured must be included, and

equal losses must be given equal

treatment. There must be com-

prehensive entitlement.

Moreover always accepting the

obvious

need

produce

something which the country can

afford, it seemed necessary to lay

down three further rules, which,

taken together with the t wo fun-

damental matters, must provide

this framework for a new system.

There must be complete rehabilita-

tion. There must be real compen-

sation — income related benefits

from income losses, payment

throughout the whole period of in-

capacity, and recognition of perma-

nent bodily impairment as a loss in

itself. Also there must be ad-

ministrative efficiency."

The report labelled negligence

actions as a form of lottery. It

described the adversarial system

as hindering rehabilitation and as

being cumbersome, erratic and ex-

travagant in operation.

(Words

not inapt at times when applied to

our own system for obtaining com-

pensation.)

As a result of the Woodhouse

recommendations The Accident

Compensation Act became law in

1972 establishing t wo schemes:

1. An occupational injury claims

scheme for wage earners;

2. A motor vehicle accident

scheme.

In each case all workers and road

users were levied at source. In this

country this can be envisaged as

paying ones insurance premium

through tax and ones car insurance

premium through road tax. A com-

mission was established to ad-

minister the two schemes. The

schemes have been enlarged to

take into their net all citizens of

New Zealand to include house-

wives and members of the armed

forces. Visitors to New Zealand

were automatically entitled except

in cases of sickness. The Accident

Insurance Corporation has now

taken over from the Commission.

The scheme provided for a

relatively small maximum lump

sum benefit

1 7 , 0 00 New

Zealand pounds in 1983 ; ,

ir-

respective of the na: re of the in-

jury. In addition, it offered a

non-taxable "dependancy" income

into the future where death had

occurred.

Permanent injury vic-

tims receive in addition a weekly

compensation on an earnings

related basis. Temporarily injured

victims receive a similar com-

pensation during the term of their

incapacity.

The Accident Compensation

Corporation became in effect a

semi-state insurance body which

was self financing. It obtained its

revenue partly from a Government

grant but mainly from levy revenue

and other investment income. Dur-

ing the early years of its existence

it consistently earned more money

than it paid out in compensation to

accident and occupational injury

victims. Indeed, it appears to have

conducted its financial affairs so

successfully that, it built up healthy

reserves and became effectively in-

dependent of Government funding.

In the statement of account

balances for the year ended 31st

March, 1985 the report of the Ac-

cident Insurance Corporation

records that under the earners fund

a total income of £199,953,000

was generated with total compen-

sation of £202 , 382 , 000 paid

out.

Under the motor vehicle account

£57,374,000 was earned against

the sum of £69,855,000 dis-

charged in compensation.

Neither

of these sets of figures disclose

the hidden income of the Cor-

poration derived from the use of

money received in premiums from

subscribers to the scheme.

The Accident Compensation Act

introduced a scheme of " no fault"

insurance to New Zealand. This

modified but did not eradicate

litigation arising out of accident and

occupational injury claims, as the

issue of quantum always remained

in dispute even though the issue of

liability was dispensed with. In the

context of our own system, it

would appear to have the effect of

reducing a hearing on liability to

one of assessment of quantum

only. Lawyers therefore continued

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