Page 1951 - Week 05 - Thursday, 10 May 2018
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CTP schemes are long-tailed insurance schemes and it can take a considerable number of years for all claims in an accident year to be finalised. The ACT does not currently undertake an evaluation of insurers’ actual profit margins. This will be considered further in the implementation of the new CTP scheme.
Insurance—third party
(Question No 1307)
Mr Coe asked the Treasurer, upon notice, on 13 April 2018:
(1) What is the breakdown of the average unearned premium surplus expected after the commencement of the new scheme, including the (a) total cost and (b) cost per policy.
(2) How will the ACT Government manage the unearned premium surplus arising from changes in the compulsory third party (CTP) scheme.
(3) What is the breakdown of the expected additional costs of including at-fault motorists in the new CTP scheme by driver and vehicle type, including the (a) total cost and (b) cost per policy.
(4) What changes will occur in how funds from the CTP Regulator Levy are expended after the implementation of the new CTP scheme.
Mr Barr: The answer to the member’s question is as follows:
(1) The amount of any unearned premium surplus will depend on the actual premiums charged by insurers, the commencement date of the new scheme relative to the timing of when premium filings are undertaken and approved, and what registration renewal periods motorists select. During the implementation of the chosen scheme, the cost estimates for premiums for the chosen scheme will be further developed once the finer details are resolved.
The Ernst and Young (EY) Estimated costs of alternative benefit designs for the ACT’s Compulsory Third Party (CTP) Insurance Scheme report available on Your Say on CTP (www.yoursay.act.gov.au/ctp) provides information on the costing estimates for the jury’s chosen scheme, with an estimate of what the unearned surplus may be on page 75. The EY report states that the unearned premium surplus if no adjustment is made “may be about $60 per policy or in excess of $15m for all policies” under the chosen scheme. Note that the EY report estimates use data as at 1 July 2017 and is based on an estimated reduction in passenger premiums of $120.
(2) As a principle, the government considers that insurers should not keep any unearned premiums as a result of the transition to the jury’s chosen CTP scheme. The government will consider options to manage this as part of the implementation of the jury’s chosen CTP scheme.
For example, in NSW a scheme has been established to allow policy holders to claim back the component of their premium outstanding after reforms took effect.
(3) The Ernst and Young (EY) Estimated costs of alternative benefit designs for the ACT’s Compulsory Third Party (CTP) Insurance Scheme report provides costing estimates for the current CTP scheme and the jury’s chosen scheme.
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