A PEAK BODY representing New South Wales legal practitioners this week said the public deserved an explanation as to why they are paying higher premiums as insurance companies see increased profits.
Law Society of New South Wales president John McIntyre argued this week that the widening gap between premiums collected and claims paid out demonstrates a need to raise personal injury compensation.
His comments came after a Parliamentary Inquiry that continued as Lawyers Weekly went to press, that attempted to uncover the reasons why insurance companies are seeing increased profits and why premiums have not yet dropped.
The Insurance Council of Australia will appear before the Inquiry, and are expected to be asked to explain why profits have not translated into lower premiums.
The Law Society argued the insurance industry needs to explain why insurance premium revenue in Australia amounted to $25.9 billion in 2004, while companies paid out $13.75 billion in claims. As well, it asked how much has been diverted into inflated claims reserves to evade criticism of excessive profits by the community.
McIntyre asked why insurance companies “deny that liability law changes have not been a major reason for recent huge profits, with the insurance industry in front by $5 billion in 2004 — an increase of up to 50 per cent over the previous year”.
“The widening gap between premiums collected and claims paid out demonstrates that personal injury compensation could be raised to a fair level without increasing premiums,” he said.