Public liability claims management
report
Public liability claims management
Research report
Download this publication
Public liability claims management (PDF 551.9 KB)
Public liability claims management (ZIP 805.4 KB)The nature of public liability insurance has precluded the type of benchmarking the Commission has previously undertaken with economic infrastructure. The heterogeneous nature of the risks covered, as well as differences in institutional arrangements and regulatory regimes, limit the scope for policy-relevant, like-with-like comparisons between Australian insurers and with overseas insurers.
The broad steps involved in managing claims are fairly common across the industry. Differences arise because, for example, the portfolios of public liability risks underwritten by insurers differ, and require different claims handling processes. It is widely recognised that there is no single best practice for public liability claims management.
Insurers generally have sufficient information to manage their own claims effectively. But better use of claims data could be made by some insurers for a range of other purposes, such as premium setting and risk management.
There is some state variation in claims management costs due to differences in statute law, legal representation costs and court procedures and costs.
The involvement of lawyers in public liability claims has increased. Litigation, in the sense of the commencement of court-related processes, has also been increasing, although most cases are settled prior to trial.
Setting premiums for public liability insurance is very difficult because of its 'long-tailed' nature (claims costs occur over many years) and the wide range of risks it covers. Since the mid 1990s, public liability insurance has operated at a loss.
The market environment in which public liability claims are managed remains competitive and should provide sufficient incentives for insurers to make their claims management practices efficient and cost effective.
There is nothing inherent in Australian insurers' claims management practices, or the environment in which they are undertaken, which would prevent the benefits from government initiatives to improve the availability and affordability of public liability insurance from being passed onto consumers.
