Financial penalties for insurers now possible under changes to ACT's Motor Accident Injuries Scheme

Insurers can now face financial penalties if they fail to comply with the ACT’s version of the compulsory third-party scheme for car crashes.

The controversial Motor Accident Injuries (MAI) Scheme went live in 2020 to allow for both those injured and those at-fault in crashes to access compensation and support.

There has been fierce opposition to the legislation both at the time and since, including claims that people are being denied access to legal advice and that there was no proper compensation for those not at fault. Victims who have accessed the scheme have also described it as a “minefield” to navigate.

While people who have made a genuine mistake and have caused an accident can access the scheme, crashes where aggravated factors such as burnouts or dangerous driving exclude the at-fault driver from accessing compensation.

In the Legislative Assembly on Wednesday (28 June), amendments were introduced to the scheme, with some fixing up technicalities and others putting more onus on insurers to comply with it.

There are four licensed insurers in the ACT recognised by the scheme: GIO, NRMA, AAMI and AAPI.

One of the amendments introduced a financial penalty for insurers found to be contravening the legislation, with the MAI Commission given the ability to manage non-compliance.

“The MAI Commission will be able to impose financial penalties on insurers who fail to comply with their license or other obligations under the Motor Accident Injuries Act 2019,” Special Minister of State Chris Steel said.

“These penalties will be based on a two-tier system, with higher penalties applying to more serious contraventions and appropriate procedural fairness to be adopted to each tier.

“The new enforcement regime will ensure insurers are held accountable for delivering timely and comprehensive benefits to Canberrans injured on our roads.”

Additionally, the MAI Commission will be able to take action where an insurer is contravening or likely to contravene the legislation.

Greens MLA Andrew Braddock especially welcomed the financial penalties, stating the Territory’s laws and regulations needed to have “teeth”.

“We’ve all heard stories about insurers who evade claims, who demand more evidence than anyone could reasonably provide, or simply fail to pay up,” he said.

“Having a two-tiered penalty system with reasonable pathways for appeals and mediation fosters good behaviour.”

Another amendment aims to close a loophole and clear up confusion about a person’s entitlements if their injury claim comes under both the MAI Scheme and a worker’s compensation scheme.

Mr Steel said certain circumstances could exist where an injured person had been able to receive defined benefits entitlements under the MAI Scheme and statutory benefits from workers’ compensation.

“The amendments will clarify that entitlements to defined benefits under the MAI Scheme for an injured person will end when a workers’ compensation insurer accepts the claim or it is otherwise settled,” he said.

“An application to the MAI Scheme can still be revived in the event liability for the workers’ compensation claim is rejected by the insurer.”

A person receiving benefits from a workers’ compensation scheme won’t be prevented from making a common law damage claim under the MAI Scheme.

The MAI legislation also needed to be updated to take into account new aggravated driving offences introduced earlier this year.

If a person is found to have been hooning or racing, the amendment means those people can have their defined benefit entitlements suspended.

“This conduct is intentional conduct, which causes or increases the risk of serious injuries or death, from a motor accident,” Mr Steel’s supplementary explanatory statement said.

Insurers will now have to get the consent of an injured person to access their details if the insurer is seeking an ‘significant occupational impact’ statement when managed claims, and insurers will be required to develop a recovery plan for the management of an injured person’s treatment and care – in line with advice from the injured complainant’s doctor.

Insurers will be able to suspend benefits to the injured person if they’re found not to be reasonably following the treatment plan.

Mr Steel said overall the changes don’t alter the substance or overall operation of the scheme, and will not reduce the benefits available.

More than 1200 Canberrans have accessed the scheme following a motor vehicle accident since it began.

The amendments will not be applied retrospectively.