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The Hon. MALCOLM JONES [10.37 p.m.]: Apart from their tragic effect on the families of those who died, the events of 11 September in New York will have long-lasting effects in many areas. The war on terrorism will add to the impact of the failure of HIH Insurance, the awards handed down by judges, not only in New South Wales but worldwide, and today's propensity to sue—litigation is the modern form of corporate warfare. In Victoria a case has been listed for three years. Imagine the costs and problems associated with a hearing lasting three years! This is a mixing pot for catastrophe as far as public liability insurance is concerned.
It is not that premiums will become more expensive but that the price of premiums will increase so much that many things that we take for granted, such as surf beach patrols, will be jeopardised. Our way of life, especially recreational pursuits, will be threatened. There will be risk wherever people congregate—at bus stations or sporting events, for example. The public have always been quick to criticise insurance and insurance companies. As for the criticism that emanates from a certain corner of this Chamber, we must put misinformed rhetoric to one side. More than 97 per cent of insurance claims are paid speedily and without incident. The public is perhaps about to experience what life will be like when events are not able to take place, or take place in such a restricted manner as to be changed and diluted beyond recognition.
Last year insurance liability premiums totalled $14 billion whereas claims amounted to $18 billion. The premiums were insufficient and the balance was paid from reserves and investment income. Shareholders will no longer allow claims to be paid from funds other than premium income so insurers are restricting liability risk. Returns from insurance companies in Australia totalled a mere 2.5 per cent last year compared with 14 per cent for banks. People in insurance broking circles have reported to me that entertainment liability accounts show that two-thirds of claims are spent on the cost and assessment of claims and not on benefits paid to the beneficiaries. Premiums for non-hazardous events such as festivals that cost about $700 in 2000 will cost in excess of $3,000 in 2001.
It is a different story when serious hazards are encountered. Theme parks will be affected and may no longer be able to function. For example, the Bridge-to-Bridge Ski Classic race is in doubt. Who will organise mountain bike competitions, whitewater canoe rafting or skydiving events without adequate liability insurance? Public liability insurance for stadiums will affect live attendance at sporting venues, if in fact sporting events can take place. The simplest solution to this problem, given the separation of powers between government, Parliament and the courts, is to restrict payouts and prescribe maximums not dissimilar to those in third party vehicle insurance and workers compensation legislation passed by this Parliament. Many reinsurance contracts will be renewed in December, and the crunch will either come then or be averted temporarily. If the insurance market continues to harden, as is occurring at present, we will be forced to countenance such issues. Please consider the points that I have raised to be an early warning. If and when life become seriously challenged by such issues, the solution is probably only in our hands.