The Care Of Victims: Implications of the Productivity Commission’s Proposed No Fault Insurance Scheme

Abstract: Traffic accidents impose large costs, with 1,291 road deaths in Australia in 2011. The total costs of road accidents were estimated to be $17 billion in 2003, equivalent to 2.3 per cent of that year’s GDP, averaging around 8.4 cents per vehicle kilometre. The Productivity Commission has recommended replacing tort law with a compulsory, government run first party insurance scheme, where all victims receive compensation from the state, regardless of fault. The proposal is being implemented across Australia, NSW has adopted it this year. Contrary to the PC’s assertions, the evidence is that no fault insurance would increase traffic fatalities by 10-30 per cent and accidents by even more. This has implications for the safety design of road infrastructure. An inter-disciplinary approach is taken, in this paper, combining, law, economics and transportation engineering to examine the interaction of legal rules, insurance arrangements, economic incentives and physical infrastructure