The public liability crisis - why did it occur and how has it been resolved?

This paper examines the cause and effect of the Public Liability crisis that emerged in the Insurance industry in Australia in 2000. It establishes the principal cause as inadequate premiums being charged by insurers in the preceding years combined with a rise in the cost of personal injury claims. In response to the crisis a range of initiatives were introduced, principally by the Commonwealth government, which are designed to assist the future predictability of losses and produce a more stable Public Liability insurance market. The full benefit of these initiatives will take some years to take effect but it would appear that the ultimate result will be a market that is charging substantially increased premiums from those applying in the 90?s and a continuing difficulty for some industries to obtain cover.