Allianz has lost a NSW Supreme Court fight over a deceptively simple question: when surgery follows a crash, is the bodily change it causes an "injury"?
In a decision handed down on July 31, 2026, the Supreme Court of New South Wales ruled against Allianz Australia Insurance Ltd in a case that should interest any insurer handling motor accident claims under the state's no-fault scheme. The court found a Review Panel had made an error of law when it decided a claimant's spinal surgery was not an "injury" under the Motor Accident Injuries Act 2017 (NSW).
The facts are clear. In January 2019, the claimant was hurt in a car accident. The injuries caused lasting pain, and after other treatments failed, he had a foraminotomy - spinal surgery that removed bone from the facet joints in his neck. It relieved some, but not all, of his symptoms.
Nobody disputed that the accident caused the need for the operation. The insurer did not argue the claimant would have had it anyway. The fight was whether the surgery itself - the permanent removal of bone - counted as an "injury" the scheme recognises.
That mattered financially. "Threshold injuries" (once called "minor injuries") under section 1.6 limit a claimant's entitlements, and soft tissue injuries sit in that box. Bone does not. As the court noted, "one thing that the definition of soft tissue certainly does not involve is bones and the skeletal system." A bone injury falls outside the threshold limits and can open the door to a common law damages claim.
The Panel had examined the claimant and accepted bone was removed during surgery it accepted was caused by the 2019 accident. Yet it found no "injury" - because the surgery was consented to, done with therapeutic intent, and had treated his symptoms.
The court called that an error of law. Section 1.4 defines "injury" as "personal or bodily injury." The right question, the court held, was simply whether the surgery caused an identifiable physiological change for the worse. Instead, the Panel fixed on why the surgery was done. It erred by "concentrating as it did, as a result, on the purpose of the surgery. Rather than on its physical consequences." As the court put it, "most surgery which results from a motor accident is, after all, likely performed with a patient's consent and with therapeutic intent" - yet the definition "is not concerned with any of these matters."
There was a coverage point in the ruling too. If surgery-related harm sits outside the scheme, a negligent driver could stay liable at common law for something the scheme does not cover, and the policy might not respond. If a claim were pursued for an injury that "did not fall within the statutory scheme," the court said, "it is likely that the policy would not cover a claim for damages resulting from such an injury." The court treated that as a further reason to doubt the Panel's reading, while noting the point could not be finally decided without looking at the actual policy terms.
For claims teams, the lesson is about method. Drawing on High Court authority, the court treated "injury" as a "definite or distinct 'physiological change' or 'physiological disturbance' for the worse." The comparison that counts is the body before the accident against the body after the surgery - not the operation alone, and not whether the patient came out ahead.
The court held the claimant's case must succeed and set aside the Panel's certificate. It directed the parties to confer on final orders and costs within 14 days, with short written submissions if they disagree. Costs would ordinarily follow the event - here, in the claimant's favour.
