The State Insurance Regulatory Authority (SIRA) has issued a $10,000 civil penalty to Insurance Australia Limited, trading as NRMA Insurance (NRMAI), for breaching compulsory third party (CTP) insurance regulations.

The fine, announced in December, followed SIRA’s investigation into non-disclosure and misapplication of demerit point loadings on thousands of CTP renewal policies since 2018.

SIRA determined that NRMAI failed to meet its obligations under the Motor Accident Injuries Act 2017 (the Act) and related guidelines. More than 48,000 policyholders were not informed about demerit point loadings, while over 21,000 policies had the loadings incorrectly applied, impacting premium calculations.

The regulator concluded these issues represented significant transparency failures, as customers were not provided with accurate or complete pricing information.

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Non-compliance findings

The investigation revealed multiple breaches, including:

• Section 10.7 of the Act, requiring transparency in premium calculations
• various clauses of the Motor Accident Guidelines (MAGs), specifically around accurate disclosure of pricing factors
• SIRA’s Notification of Significant Matters Policy, which mandates that significant breaches be reported within five days
• NRMAI’s licence conditions under the CTP insurance scheme

SIRA stated that NRMAI’s internal controls failed to identify and escalate these issues promptly, resulting in delays in notifying the regulator. For example, while the insurer discovered issues with the demerit point loadings in early 2024, it did not report them to SIRA until April 2024, well beyond the required reporting timeframe.

Corrective actions and penalty decision

NRMAI has since taken steps to address the breaches, including issuing refunds to affected customers and implementing system fixes to prevent recurrence.

The penalty was set at $10,000, far below the maximum allowable penalty of $110,000 under the Act. SIRA stated this amount reflected both the seriousness of the breaches and NRMAI’s cooperation during the investigation.

The regulator noted that the breaches, which spanned more than five years, indicated systemic issues within NRMAI’s processes for managing regulatory compliance. The lack of adequate internal controls, combined with delays in reporting significant matters, contributed to SIRA’s decision to impose the fine.

Future compliance and oversight

SIRA said it would closely monitor NRMAI’s compliance with CTP scheme requirements. The penalty and findings from the investigation will remain on NRMAI’s compliance record and could influence future regulatory actions.

NRMAI has the right to challenge the penalty through an internal review under the Administrative Decisions Review Act 1987. If dissatisfied with the outcome, the insurer may escalate the matter to the NSW Civil and Administrative Tribunal (NCAT).

The case underscores SIRA’s expectations for licensed insurers to maintain transparency and ensure accurate information is provided to policyholders under the CTP scheme. Regulatory authorities may publish enforcement outcomes in line with the Act’s provisions.

The regulatory action follows SIRA’s recovery of more than $10 million in workers’ compensation premiums from underinsured employers in New South Wales.