To cap or not to cap? Tassie finally joins the party

Late last year Tasmania passed changes to its capped liability legislation, finally bringing it into line with the mainland, more than 10 years after the legislation was first introduced in the apple isle. The legislation allows professional groups to register schemes, by which their members can, by statute ‘cap’ or limit their professional liability, to be consistent with their level of professional indemnity insurance. Such schemes are designed to promote the availability and affordability of professional indemnity insurance, particularly for higher risk professional groups.

Prior to the change, the Tasmanian legislation contained a singularly unhelpful provision ’27(c)’, which was not in the legislation for all other states and territories. Effectively, ’27(c)’, meant that consumers could demand professionals opted out of schemes, and undermined their effectiveness. In practice, the clause, which was unique to the Tasmanian legislation, rendered the legislation a toothless tiger, and ‘out of step’ with otherwise uniform capping legislation nationally. As a result, only one scheme was ever registered in Tasmania.

The change to Tasmanian law is likely to see an uptake in professional groups, such as valuers, engineers and lawyers seeking to register schemes in Tasmania (or to seek to rely on mutual recognition of schemes registered in other states / territories), particularly where they otherwise have national coverage for their schemes.

The now, truly national coverage of capping legislation will provide greater certainty to existing members of such schemes and their insurers. The truly national coverage of such schemes may also provide an ‘added incentive’ to professional groups who are yet to embrace the (numerous) benefits that capped liability schemes provide to their members.

For more information – see the Professional Standards Amendment Bill 2016 (Tas) – assented to on 24 November 2016, becoming Professional Standards Amendment Act 2016 (49 of 2016) [TAS].