Assessment of CTP insurer profit underway

26 July 2022

SIRA has reached the second stage in its assessment of CTP insurer profit, which will ultimately determine if insurer profit should again be clawed back and returned to NSW drivers.

After concluding the preliminary review of profit at an industry level, actuaries are now reviewing the profit earned by each individual CTP insurer on the sale of Green Slips.

Under the transitional excess profits and losses (TEPL) mechanism introduced in the 2017 CTP reforms, SIRA has the power to claw back insurer profit above 10%.

In 2021, SIRA activated the mechanism for the first time to claw back almost $91 million in insurer profits. This profit was redistributed among NSW motorists through savings on Green Slips.

The current assessment is reviewing whether insurers earned excess profit on the 2018, 2019 and 2020 accident years.

The assessment must also determine that there is sufficient certainty of insurer’s future claims costs for profit to be recouped.

Insurers can apply to SIRA to retain up to 3% of profit each accident period for investing in measures that are proven to deliver benefits to the scheme.

To date, SIRA has granted preliminary approval for five applications.

To receive final approval and to retain a share of profit, insurers must have evidence that the innovation has delivered measurable benefits.

SIRA’s decision on whether CTP insurer profit will be returned to motorists is expected before the end of 2022.