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How prices were reduced

Under the new CTP scheme the average price of a Green Slip has been reduced by around $124 (statewide).

Why are Green Slip prices so high?

Insurers set their own Green Slip prices in a competitive market.  Insurers must charge enough to cover the cost of future claims, as well as the costs of doing business.

In an insurance scheme, this cost is dependent on the amount of risk and uncertainty as well as the time it takes to pay benefits to injured people.

In the previous Green Slip scheme, the level of uncertainty was high and payment periods were lengthy, which meant we paid higher premiums.

Fraudulent behaviour and exaggeration of claims were also estimated to add up to $75 to the cost of every Green Slip premium.

How has the new CTP scheme reduced prices?

The new CTP scheme is a less adversarial system where in most cases insurers and lawyers don’t need to determine fault and negotiate compensation.

Providing income payments, medical, treatment and care costs for minor injuries (regardless of who was at fault in the accident), instead of lump sum compensation payments will reduce the cost of Green Slips, and importantly, provide better support for injured people when they need it.

Over recent years, legally represented claims for minor injuries (e.g. a soft tissue injury) had more than doubled.  This had led to higher Green Slip prices.

Claims for minor injuries were taking at least 18 months to be finalised and this created uncertainty for insurers when assessing risk and setting premiums.

It also tied up valuable scheme funds in administration costs such as medical investigations, insurer and legal costs. This is particularly the case when investigating who was at fault in the accident.

Further information

Green Slip prices for motorcycles

In 90% of motorcycle accidents, the rider is ‘at fault’. This is often because there is no other vehicle involved in the accident.

Under the new CTP scheme, motorcyclists (particularly those at fault) will get greater coverage.

While their CTP prices have not come down, they will get up to six months of benefits including:

  • weekly income payments (if time off work is needed)
  • medical and treatment expenses
  • commercial attendant care (for help is needed around the home).

Around 1,400 at-fault motorcyclists are injured every year and will benefit from the new scheme.

Injured motorcyclists who were not at fault with more than minor injuries can receive benefits beyond six months.

CTP premium prices in country areas

Average CTP prices are cheaper in country areas than in metropolitan areas.

Under the previous scheme, the average CTP premium for a passenger vehicle in country NSW was $481 compared to Sydney metropolitan prices of $710.

Under the new CTP scheme, prices have dropped in all parts of NSW for motor vehicles and prices will continue to be cheaper in country areas.

Keeping prices affordable during the transition to the new scheme

The Government has introduced a profit normalisation mechanism with CTP insurers during the transition to the new scheme.

This mechanism enables any insurer super-profits to be returned to motorists via lower prices.

This mechanism will also be available as a reserve power to the State Insurance Regulatory Authority (SIRA) after the transition, if insurer profits again rise to unacceptable levels.

Reducing the time frames for claims

Under the previous scheme the average time for a claim to be finalised was between 3 and 5 years. Claims that take many years to be resolved create uncertainty for insurers and drive up the cost of premiums.

This was also a factor in why insurers reaped excessive profits from CTP. They didn’t know how long a claim would take to be finalised and what the overall cost would be, and so they over-estimate the amount of funds they needed to keep in reserve.

Having common law as the only option to be compensated for past loss of income added years to a claim.

Under the new CTP scheme, people will be provided with what they need, when they need it. Those with minor injuries are provided with income, medical, treatment and care benefits to support their full recovery and they cannot make a common law claim for damages.

Those with more serious injuries (who were not at fault) are provided with benefits for up to two years and may not need to make   a common law claim for damages unless they have an ongoing incapacity for work. Their medical, treatment and care costs are ongoing, for life if needed. Consequently, there will be greater certainty for insurers when setting premium prices.