We do not set Green Slip prices. Insurers compete with each other and set their own prices in a competitive market.
Our role as the regulator of the CTP Scheme is to:
- issue licences for insurers to sell Green Slip policies and manage claims
- review price changes proposed by insurers. We have some power to reject them if they are not in keeping with the Green Slips price setting rules.
Green Slip price setting rules
Green Slip price setting rules are complex. This is some general information about these rules.
In general terms:
- Insurers file proposed Green Slip premiums with us at their discretion but generally at least once a year. This is when they tell us about proposed price changes. Some exemptions apply.
- We then engage an independent actuary (currently Ernst & Young) to review each insurer’s proposal and the actuary provides independent advice which informs our decision making process.
- The MAC Act 1999 provides us with limited power to reject a premium based on whether we believe that the premium:
- will not fully fund the present and likely future claims liability
- is excessive
- does not conform to premiums determination guidelines, or
- is calculated in contravention of the maximum commission allowed to be paid to agents
- Insurers are allowed to make a profit, however the premium paid by the motorists must predominantly go towards:
- covering the cost of claims
- covering the cost of insurers' claims management and administration of policies
- the Medical Care and Injury services (MCIS) levy
The MCIS levy is used to pay for:
- public hospital and ambulance costs of all road accident victims
- all people requiring lifetime care following a motor accident, and
- the operation of SIRA in administering the MCA Act
To promote competition and innovation by insurers, we allow risk-based pricing within certain limits to keep premiums affordable.
In very simple terms, this means traditionally lower-risk drivers subsidise (within strict limits) traditionally higher-risk drivers.
On top of these prices, an insurer can offer a discount or impose a loading on a Green Slip premium.
Insurers may take into account objective risk factors (excluding postcode, gender, race, policy duration or GST status).
Risk factors can include:
- the age of the owner/driver and their driving record (eg number of at-fault crashes, insurance history, demerit points and no claims bonus)
- the age of the vehicle
We specify the overall range of discounts and loadings that insurers can apply:
- the maximum bonus or discount is 15 per cent (except for drivers over 55 where it’s 25 per cent)
- the maximum loading varies from one insurer to the next but is currently around 43 per cent on average
You can read the Motor Accidents Compensation Act 1999 (MAC Act 1999) for a full explanation of these requirements
These guidelines are what we and insurers follow when setting CTP insurance prices: