How prices will be reduced

Under a reformed CTP scheme the average price of a Green Slip will be reduced by more than $100.

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 current Green Slip scheme, the level of uncertainty is high and payment periods are lengthy, which means you pay higher premiums.

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

How will reforms reduce prices?

Benefits set by legislation will mean a less adversarial system where people get more support sooner.

Providing benefits set by law for minor injuries 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.

Under the reforms, an injured person, regardless of fault, will receive up to six months of benefits including:

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

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

Currently claims for minor injuries can take at least 18 months to be resolved and this creates uncertainty for insurers when assessing risk and setting premiums.

It also ties 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

Green Slip prices for motorcycles are generally lower than for other classes of vehicles although there are exceptions with certain categories of motorcycle.

This is because 90% of motorcycle accidents do not involve another vehicle for the injured motorcyclist to claim against.

This means they cannot make full CTP claims under the current scheme so the cost of their injuries does not contribute to Green Slip price setting.

Under a reformed CTP scheme, motorcyclists will be the big winners in terms of benefits.

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

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

Around 1,400 at-fault motorcyclists who are injured every year will benefit from these reforms.

CTP premium prices in country areas

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

The average CTP premium for a motor vehicle in country NSW is currently $482 compared to Sydney metropolitan prices of $711 .

Under the reforms, prices will drop 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 will introduce 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 then 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 current system the average time for a claim to be finalised is 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 is also a factor in why insurers reap excessive profits from CTP. They don’t know how long a claim will take to be finalised and what the overall cost will be, and so they over-estimate the amount of funds they need to keep in reserve.

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

Under the reforms, people will be provided with what they need, when they need it. Those that fully recover from their injuries with the support of set benefits may not need to make a common law claim for other damages. Consequently, there will be greater certainty for insurers when setting premium prices.