Page 1178 - Week 04 - Tuesday, 2 April 2019
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We want to see the maximum amount of scheme costs possible be directed to treatment and care for injured people, not getting chewed up in disputes about liability. By moving to a no-fault model where everyone who gets injured in a motor vehicle accident is entitled to treatment, care and income replacement benefits, our new scheme will help bring these costs into a much better balance.
In relation to premium costs, the review found that while these have been reducing in recent years, thanks to the introduction of competition in the ACT market, Canberrans continue to pay amongst the highest costs in the country for personal injury coverage. Only South Australia has higher premium costs. The lowest CTP premium for a passenger vehicle in the ACT is now sitting at $520 for a 12-month policy. I would note that this now makes up a larger cost than the total cost of registering a car in the ACT, with all government fees representing an average cost of $464. Think about that for a moment.
The review also contains a range of additional data which is useful in the context of our proposed transition to a new motor accident injury scheme, and the types of support people will need and be entitled to. For example, the report highlights that a majority of CTP claims are for injuries classified as minor in severity. About 70 to 75 per cent of claims result in settlements of less than $100,000. At the other end of the scale, only about four per cent of claims involve settlements of half a million dollars or more for severe and critical injuries.
Whiplash strains represent a little over 55 per cent of all claims, while brain injuries and spinal injuries combined represent less than one per cent of all claims. This data is important in highlighting that the majority of CTP claims relate to injuries that people can and will recover from if they receive the right treatment and care up front as soon as possible after their accident, not many years later under the current arrangements. The goal of our motor accident insurance scheme is geared towards not maximising a payout years down the track, but getting people well again so that they can get on with enjoying life the way they were prior to their accident.
For the first time this review includes an assessment of insurers’ estimated achieved profit margin when compared to the expected profit margins included in their premium filings. As we have a privately underwritten scheme, it is reasonable that insurers make some profit, but it is also very important that these profits are reasonable and that they are in line with the community’s expectations. After all, CTP insurance is a product that all drivers are required by law to hold, so it is not exactly a hard sell for the insurers.
The review shows that the profit trend has been decreasing in recent years. From 2016 to 2018 the estimated achieved profit margin in the ACT fell from 17 per cent to just under 10 per cent. This is significantly lower than the estimated profit margins in some other jurisdictions, such as Queensland.
We understand that there is a lot of interest in insurer profit margins, particularly as the ACT transitions to a new motor accident injury scheme. That is why the new legislation gives the power to determine what reasonable profits are and to take action
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