A Supreme Court ruling has sent a clear message to insurers: stick to the evidence and keep the process fair, or risk having decisions overturned.
On July 25, 2025, the Supreme Court of New South Wales handed down its decision in Insurance Australia Ltd trading as NRMA Insurance v Cahill [2025] NSWSC 828, a case that’s likely to resonate with anyone handling motor accident claims. The dispute centred on whether James Cahill, who was involved in a car accident on July 9, 2020, had suffered a “non-threshold” injury to his lumbar spine - an important distinction under the Motor Accident Injuries Act 2017 (NSW), because it determines whether a claimant can receive damages.
After the accident, Cahill sought assessment of permanent impairment from the Personal Injury Commission of NSW, claiming injuries to his neck, back, right leg, right arm, and right shoulder. NRMA Insurance, meanwhile, asked the Commission to determine if the injuries were “threshold injuries” - in other words, injuries that would not entitle Cahill to damages if they were only soft tissue or certain psychological injuries.
The first medical assessor brought in by the Commission didn’t think the accident was to blame for Cahill’s symptoms. Instead, the assessor pointed to Cahill’s pre-existing multiple sclerosis as the likely cause and found no injuries from the accident itself. Not satisfied with that outcome, Cahill applied for a review.
The review panel, tasked with taking another look, focused on whether Cahill’s lumbar spine injury qualified as a “non-threshold” injury. Under the Act and its guidelines, this would require at least two clinical signs of radiculopathy. But the panel went in a different direction. It concluded that Cahill had suffered a tear in his lumbar disc cartilage and decided this was a non-threshold injury, giving him a 5% Whole Person Impairment rating. This opened the door for Cahill to claim damages, though not for non-economic loss, since his impairment didn’t cross the 10% threshold.
Here’s where things got tricky: the idea of a lumbar disc cartilage tear hadn’t been raised by either party. It wasn’t in any of the evidence or submissions, and neither side had a chance to weigh in on it. The panel didn’t alert the parties that it was considering this new basis for its decision.
NRMA Insurance challenged the review panel’s determination in the Supreme Court. Their argument was straightforward: the panel didn’t explain its reasoning, didn’t point to any supporting evidence for the tear, and didn’t give the parties a fair chance to respond. Justice Adamson agreed, finding that the panel’s reasons fell short of legal standards and that deciding the case on an unraised issue denied both sides procedural fairness. The court called this both a legal error and a jurisdictional error.
As a result, the Supreme Court set aside the review panel’s determination from December 19, 2024, and sent the case back to the President of the Personal Injury Commission for referral to a new review panel, made up of different members. No order as to costs was made.
This case wasn’t about the fine print of an insurance policy. Instead, it was about following the rules set out in the Motor Accident Injuries Act 2017 (NSW), especially what counts as a threshold injury and how medical disputes should be resolved. The court’s message is clear: insurers and review panels must base their decisions on the evidence and arguments actually put forward, not on new theories introduced at the last minute.
For insurance professionals, the lesson is simple but important. Transparency and fairness aren’t just ideals - they’re requirements. If you stray from the evidence or fail to keep all parties in the loop, you risk having your decisions overturned and the process starting over. In a sector where process is everything, this case is a timely reminder to play it straight and keep the lines of communication open. The courts, it seems, are watching closely.
