CTP reforms to reduce premiums

CTP reforms to reduce premiums | Insurance Business

CTP reforms to reduce premiums

The insurance industry is open to reforming the current compulsory third party (green slip) scheme but it cannot guarantee how much premiums will fall.

Insurance Council of Australia CEO Robert Whelan told the CTP roundtable at the NSW Parliament House, that the proposed shift to a no-fault scheme was a more viable long-term model that would drive some costs out of the process.

Whelan said CTP prices had been rising largely due to an increase in claims frequency and the impact of the global financial crisis, which had slashed the investment returns available from government bonds. This hurt the ability of insurers to ensure they had adequate capital to pay claims.

 “The industry is quite open to reform. It is happy to go through the process of assessing how best to underwrite a reformed scheme. These schemes typically need to be looked at every 10 years or so because they do get out of step with current circumstances.

 “Streamlining the scheme and bringing down costs will have downward pressure on CTP prices,” he said. “We can’t guarantee the extent to which premiums will go down. The reason for that is we don’t have clarity around the claims position on this new scheme.

“There is a lot of evidence that [...] proves early intervention and rehabilitation started early in an accident victim’s situation actually has much better outcomes,” Whelan said. “They can get back to work, back to their lives, much faster.

“Protracted legal argument about who is at fault just frustrates that process. We would argue that anything that streamlines the system and allows us to be able to intervene and rehabilitate individuals faster, and brings those costs down, is actually a good thing and will have a better outcome.”

Whelan also defended the competition among CTP insurers. “The fact that insurers are out there offering packages and trying to entice customers into their products I think is a healthy thing, he said. “It’s exactly what they should be doing and it’s exactly what the scheme structure is designed to do – bring people into the market, make that market competitive, make it efficient, drive down costs and therefore be able to provide benefits to consumers.”