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Public Liability Insurance: Why Politics Matters

“Don’t vote, it only encourages them,” a wit once proclaimed.

“It doesn’t matter who you vote for, a politician still gets in,” said another.

“If elections changed anything, they wouldn’t be allowed,” said a more cynical observer.

Teachers of politics often encounter this attitude of indifference or disregard towards the political system. The challenge for teachers and students is to alert those around them to the everyday relevance of political activity.

Reports in recent weeks about public liability insurance premiums provides a good example of how a seemingly dry subject can be used to bring the political process alive for the disinterested.

The 7.30 Report

The ABC’s 7.30 Report had a segment on this issue on January 21st, 2002. Click here to read the transcript of the segment.

The segment began with the reporter’s commentary:

“The footy season may still be three months away, but on the outskirts of Melbourne, Berwick Football Club is already counting the cost of a massive hike in its public liability insurance premium.”

Then we saw Peter Jensen, a representative of the Berwick Football Club:

“Our insurance this year is going to go from $360 per year, which is supplied by the Dandenong District Football League, and they’ve just informed us that it will go $4,000 to cover us this year for insurance, for our public liability.

“So it’s a massive hike and I don’t think any chocolate drives or anything are going to be able to make up that money.”

According to the reporter:

“At least 400 junior footballers are pushing to join teams at Berwick, but the club has shelved plans to create new teams to accommodate them.

“And the league in which Berwick plays expects the ripple effects of the massive public liability insurance price hikes to be felt for months to come.”

Then Rodney Garwood from the Dandenong Junior Football Club outlined the practical effect of the problem:

“You could lose say 10-20 teams and 20 players a team, 400-500 kids probably could miss out.”

The example was then given of the chairlift operator at Arthur’s Seat in Victoria who may have to close the tourist attraction because he can’t find a company willing to insure the chairlift.

What followed was a debate about the causes of the increase in insurance premiums for public liability. Amongst the possible causes:

  • Lack of profit for insurance companies.
  • An increase in litigation (legal action) by members of the public, possibly encouraged by the legal profession.
  • Anxiety following the events of September 11.
  • Uncertainty in the insurance industry following the collapse of HIH in 2001.

The Minister for Small Business, Joe Hockey, was interviewed about his proposal for a National Compensation Scheme to remedy this situation. Hockey plans to legislate to abolish the common law right to sue in these matters.

The reporter then spoke to Ian Dunn of the Law Institute of Victoria. He disputed Hockey’s claim that litigation was increasing.

Peter Jamvold from the Insurance Council of Australia called on the federal, state and territory governments to hold a forum on the insurance crisis.

Queensland Insurance Task Force

Since this report, the Premier of Queensland, Peter Beattie, has convened a Task Force to examine the problem. Click here to read a statement from Beattie.

Beattie has already offered to underwrite (pay) the insurance premiums for 1300 Parents and Citizens Associations in Queensland.

The Task Force will take submissions from groups such as insurance companies, the legal profession, sports organisations and other community groups, local government, and others.

Is the Australian Way of Life Under Threat?

Today, according to a report in The Australian, the Assistant Treasurer, Senator Helen Coonan, has convened a meeting of State government ministers for next month to co-ordinate a program of reforms to the insurance industry.

Coonan is reported as saying:

“I’m making the offer because I think it is so important that Australians can continue to enjoy the kind of lifestyle we all love – the great outdoors – and to continue to carry on community functions. The great volunteering tradition we have in Australia might be under threat.”

Coonan says that the States have the “clear and unambiguous responsibility” to reform the insurance industry, but that the Commonwealth government should take a “leadership role”.

The Relevance Of This Issue In A Politics Class

There are many ways in which this issue can be used to illustrate the relevance of of politics:

  1. It is an issue which has an easy-to-understand impact on local communities and individuals. Government policies on insurance matters are not isolated from the reality of everyday life.
  2. There is a proposal from the Government to remedy the problem. The Executive governments of the States and the Commonwealth will devise a course of action which will then be submitted to Parliament for approval.
  3. There will be input, criticism, support or opposition from a range of groups in the community: the legal profession, the insurance industry, local councils, sporting groups, etc. The role played by pressure groups will be crucial to any outcome.
  4. Legislative responsibility for the issue rests with the State governments. In Australia’s federal system of government, the constitutional limits to the power of the Federal government means that relations with the States are crucial in many areas.
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Malcolm Farnsworth
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