Whose approach is right when it comes to economic loss – the insurer or the claimant? – Allianz Insurance Limited v Larriera [2016] NSWSC 441

Manuel Pedro Larriera (the claimant) was severely injured in a motor vehicle accident. A Claims Assessment and Resolution Service Assessor (the assessor) assessed damages in the sum of $1,812,727.

Of particular importance is the damages assessed for:

• Past economic loss in the sum of $155,997 including a component for superannuation and Fox v Wood;

• Future economic loss in the sum of $888,423.20 including a component for superannuation.

Allianz Australia Insurance Limited (the insurer) commenced proceedings in the Supreme Court of New South Wales (the Court) seeking to set aside the decision of the assessor on the basis he had fallen into administrator error in his assessments of both past and future economic loss.

The insurer submitted that:

The Court was not satisfied that the assessor failed to discharge the duties imposed upon him 'derivatively' by s 126 of the MACA. The Court found that the assessor accepted the evidence of the claimant, who could only work to a capacity of 60%, and would continue to suffer a diminution in future earnings. The assessor proceeded to assess future loss of earnings on that basis.

In respect of the assessment of past loss of earnings, the Court determined that a factual disconnect between the 'probable' and 'actual' earnings over a period is not suggestive of a legal error. The assessor adopted the 'probable' figure that the claimant would have earned but for the injury. The Court did not find the assessor applied the wrong test or fell into error by adopting this approach.

The Court was not satisfied that the assessor failed to engage with the insurer's submissions because the difference between the parties' submissions was the integers for the calculation of the actual loss suffered by the claimant, as distinct from the approach which should be taken to assessing the claimant's loss. The assessor accepted the claimant's approach and, in doing so, implicitly rejected the insurer's approach. The Court held that no more is required of a claims assessor to 'engage' with the other side's submissions and preference of one approach over another is not a legal or jurisdictional error.

The Court determined that the assessor's reasons for his assessment were legally adequate, stating that the assessor's reasons were set out on the material before him and were determined by questions of fact.

The Court specifically stated that its role was not to determine the adequacy of the assessor's reasons and the Court did not enter down that path.
The Court dismissed the insurer's application finding none of the alleged errors were made out and ordered the insurer to pay the claimant's costs.

When a disagreement arises as to the approach of calculating economic loss, it is open to a claims assessor to prefer either the claimant or the insurer's submissions, over the other. A claims assessor is not under any obligation to further elaborate the reasons why or 'engage' with the other side's submission, that is, a claims assessor can simply state he/she agrees or disagrees.

Claims managers should be wary of challenging decisions by claims assessors where the primary argument is that the assessor failed to explain his or her reasons. As this case demonstrates, whilst an assessor is required to set out his or her pathway of reasoning, a court may be prepared to infer elements of the pathway, even when not expressly stated. Counsel's advice should be sought on whether an administrative law challenge is warranted.