Communication of entitlements

Insurer claims and conduct assurance program

October 2023

1. Introduction

The Motor Accident Injuries Act 2017 (the Act) establishes the NSW Compulsory third party (CTP) insurance scheme.  In conjunction with the Act, the Motor Accident Guidelines: CTP Care (the Guidelines) support the delivery of the objects of the Act by establishing principles and requirements to ensure timeliness, fairness, transparency and better outcomes and experiences for claimants. The Act and the Guidelines set out the duties and requirements for communication of entitlements for persons injured as a result of a motor crash in NSW.

The State Insurance Regulatory Authority (SIRA) is the independent regulator of statutory schemes in NSW, including CTP. In line with Division 9.1 of the Act, SIRA has issued licences to six insurers who operate within the scheme. These licenced insurers are required to adhere to the duties and obligations placed on them under the Act, Guidelines, and the conditions of their licence. SIRA has a statutory function to monitor the compliance of the licenced insurers and authority to publish information about their level of compliance with the duties and obligations imposed.

In accordance with its statutory functions and pursuant to section 10.24 of the Act, SIRA undertook a supervisory activity to ensure that licenced insurers were meeting its obligations as it relates to the communication of entitlements to ensure claimants are receiving clear communication about their entitlements after lodgement as well as prior to the claim becoming inactive.

The activity was conducted via a desktop review of information, including evidence from claims files, provided by insurers. This report outlines the findings of the supervisory activity based on the information available.

SIRA notes and appreciates the licenced insurer’s engagement and transparency throughout this supervision activity.

2. Desktop review

The Lead Auditor engaged with insurer claims representatives throughout the review to highlight potential non-compliances and gather further information to assess and determine compliance.

Through this process, insurers were also afforded the opportunity to provide SIRA with their views in relation to the findings. Insurer responses were considered prior to the Lead Auditor making a final determination.

3. Results

Key scheme observations

When reviewing insurers compliance to the general duties under section 6.3 (3) (a) of the Act: duty to provide the claimant with information about entitlements to statutory benefits, SIRA observed the following:

• Acknowledgement letters from all insurers contain information about a claimants’ statutory benefits for treatment and care and weekly benefits, demonstrating insurers are consistently informing claimants of their statutory benefit entitlements, at lodgement of a claim.
• Insurers indicated that information about the claimant’s entitlements to damages is generally advised at the first liability decision, rather than at lodgement of the claim. SIRA considers this appropriate given the focus in the initial stages of a claim in relation to early access to support, treatment and weekly payments.

When reviewing insurers compliance to the inactive claim requirements as defined in the Guidelines clause 2.6 (a) & (b), SIRA observed the following:

• All but one insurer demonstrated a consistent approach to ensure contact or attempting to contact the claimant prior to closure notices being sent, demonstrating adequate systems in place to ensure compliance with clause 2.6 (b) (i)-(ii).
• Despite the above, there was a high proportion of unsuccessful attempts to contact claimants to discuss the requirements in line with clause 2.6(a)(i)-(iv) of the Guidelines. Therefore, SIRA was unable to verify compliance with the requirements among some of the insurers. Where insurers were able to demonstrate contact, there was limited compliance in relation to discussing all requirements in line with clause 2.6(a)(i)-(iv) of the Guidelines.
• There were identified deficiencies in insurers notices as per clause 2.6 (b). Insurers self-identified the deficiencies in the notices and templates were updated to ensure the notice requirements as per clause 2.6(b) of the Guidelines were met.

4. Regulatory response

All insurers were provided with an individual report from the review outlining their results, details of observations and required actions.

Based on the findings of the review, SIRA will take a tailored regulatory approach with each insurer to ensure substantial and sustained compliance is achieved across all requirements.

• Action 1: Where required, insurers are to develop and implement a remediation plan to ensure systematic compliance is embedded. The development of the remediation plan and associated reporting requirements must be conducted in line with SIRA’s remediation plan expectations.
• Action 2: SIRA will monitor the implementation of the remediation plans on a monthly basis. Remediation plan requirements will be monitored until SIRA is satisfied that substantial compliance is being achieved.
• Action 3: SIRA will consider further independent assurance activities based on risks presented by each insurer.
• Acton 4: SIRA will publish the results of the ICCAP activity in line with its Regulatory Publishing Policy.
• Action 5: SIRA will review the Guidelines to determine whether changes are appropriate to clarify expectations and deliver improved outcomes.

Appendix 1 – review criteria