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Review of the Road Transport (Third Party Insurance) Act 2008

By johnboy - 20 March 2012 4

Andrew Barr has now posted the long awaited Review of the Road Transport (Third Party Insurance) Act 2008:

The review indicates there have been benefits from the legislative changes introduced in 2008.

There is some increased focus on treatment and there have been some downward pressures on premiums.

The review has been able to look at the less complex cases – those are the cases that have been settled in the first three years.

It is unlikely that such effects would continue to be seen once more complex claims are finalised.

The 2008 legislative changes were not designed to address claims inflation in relation to moderate to severe injury cases.

This report in effect indicates that while the 2008 changes have been beneficial, there is still more to be done if we are to have a sustainable and effective CTP system.

The legislative changes currently before the Legislative Assembly are designed to align the Territory’s CTP scheme more closely to other jurisdictions.

The benefits of the proposed reforms include the potential for a competitor to enter the market, which would likely lead to premium price competition, as well as curtailing claim cost inflation.

The benefits of the reforms in front of the Assembly would fall to all the households in the Territory.

What’s Your opinion?


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4 Responses to
Review of the Road Transport (Third Party Insurance) Act 2008
dtc 10:20 am 21 Mar 12

The reason NSW is cheaper is because it pays far less if you are injured, with thresholds (minor to moderate injury = no compensation; and limits on damages).

Essentially the cost of having an accident is transferred from everyone (by way of lower premiums) to the injured person (who receives less compensation). Or from people in the states (lower premiums) to the Commonwealth (through Medicare and Centrelink).

Keep in mind that in NSW, if you are injured at work or driving a motor vehicle, your compensation is limited. But if you are injured in other ways (walking down the street and someone drops something on your head), the limitations are far less. So how you are injured can determine the compensation you get, not how much you are injured.

Now this may be a transfer of risk you agree with (at least until you have an accident). But the cost of CTP is mostly related to the cost of payment to injured people. That said, you may believe (and I would not argue) that the ACT court system is extremely generous to some injured people and should be brought into line in some way.

Its not the NRMA ‘rorting’ the system, since it has been open to any other insurer to offer CTP in the ACT for several years. The fact that they haven’t may suggest its not as profitable as you may think.

Also, of course, insurers have suffered profit falls over their entire business, particularly due to the various natural disasters and apparently the share market hasnt done very well recently. So CTP premiums can’t be looked at in isolation, the insurers are seeking to up premiums whereever they can.

p1 10:04 am 21 Mar 12

luv_this_city said :

There is no incentive either for the owners of NSW and other interstate plated vehicles to change their rego to the ACT when it cost more, many have resided here for years and still not changed, some have even changed their vehicles and still NSW plated. This is illegal (meant to change in 90 days)but infrequently enforced, so the ACT misses out on real Registration revenue, from thousands of motorists.

You would have to be saving a fair amount on your CTP insurance to make it worth the hassle of taking your car over the pits every year in NSW. That said, I still can’t understand why at least one other company hasn’t got onboard with the ACT system, if NRMA is rorting us as much as everyone says.

luv_this_city 8:29 am 21 Mar 12

Why can’t we just adopt the NSW system (by changing whatever legislation is necessary) and ditch the NRMA monopoly which is costing me and many others real money as the CTP we pay in the ACT does not relect anything to do with the driver or vehicle.

I pay $536 to NRMA but if I were in Jerrabomberra CTP greenslip $355-407 (across 7 insurers including NRMA). Is it not the same insurance ??

I understand that other driver with a higher risk profile may pay more for CTP in NSW, but isn’t that life, insurance relfect the individual risk, that applies to their comprehensive insurance.

There is no incentive either for the owners of NSW and other interstate plated vehicles to change their rego to the ACT when it cost more, many have resided here for years and still not changed, some have even changed their vehicles and still NSW plated. This is illegal (meant to change in 90 days)but infrequently enforced, so the ACT misses out on real Registration revenue, from thousands of motorists.

AsparagusSyndrome 1:53 am 21 Mar 12

Whatever putative ‘downward pressures’ the 2008 legislation may have provided on simpler claim cases, the result overall has seen us hit with an 8 percent increase in CTP in the last 12 months. That’s nearly three times the rate of annual salary increase of many public servants in town (and probably many other people in the private sector too), and a good deal above CPI inflation (if you can ever believe the officially quoted CPI figures). Claims are clearly skyrocketing compared to the average standard of living. So it’s clearly not a “supply and demand” relationship. (Well, with ‘compulsory’ in its title and no competition locally, price sensitivity or discipline was never on the cards, was it?)

It seems that there are two common approaches to ‘budget management’ in the government and similar service sectors:

1. Those that become ever more complex and supposedly try to deliver ever better ‘outcomes’ but end up becoming rapidly more expensive and perhaps ‘gold-plated’ or ‘feather bedded’ by helping themselves to our wallets through taxes and charges that rise annually way ahead of inflation (e.g. hospital and medical services & insurance, car rego, utilities, post office box charges, etc), exacerbated by a lack of competition to drive efficiencies; and

2. Those that seek to restrain budget increases, chiefly by limiting our salary increases, while requiring more productivity through greater workloads and longer working hours.

Both ways we get squeezed. At some point a line needs to be drawn on the real costs of these kinds of services, with some really smart or pragmatic thinking about just what type or level of service is really necessary and identifying other input costs that can be controlled if the service body bothers to exert its willpower over external cost influences.

There’s clear market failure here, which needs remedying, either through the introduction of real competition, or active and tight government intervention in the design, management and delivery of services (and by this I am NOT referring to privatising existing government enterprises).

Competition, or active government intervention, would be greatly preferable to the common, inefficient and “lazy” methodology of protecting the monopoly status quo, allowing the service providers to keep jacking up the real costs of charges to users without discipline, and squeezing salaries that already rise slower than inflation. That’s dinosaur thinking that was rooted out of most of Western economies in the 1980’s. Why does it still exist in these service areas?

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