The State Insurance Regulatory Authority (SIRA) will recover a whopping $178.7 million in excess profit from CTP insurers after activating the transitional excess profit and losses (TEPL) mechanism.
SIRA explained that the clawback had taken extra profit insurers earned on compulsory Green Slips sales.
“SIRA is recovering a record $178.7 million in excess insurer profit earned in 2018 and 2019,” said SIRA chief executive Adam Dent. “This amount represents pure profit taken by insurers, above a 10% profit margin, after injured road users receive the treatment and care they need. In the face of rising cost pressures, the profit will be used to maintain the affordability of Green Slips.”
Two levies forming part of the cost of Green Slips will increase from January 15, 2023:
Dent explained that recouping excess insurer profit lessens the effect of levy changes on motorists in New South Wales (NSW).
“The $178.7 million of insurer profit being injected into the Motor Accidents Operational Fund will help offset the levy changes and maintain the savings introduced from the clawback of insurer profit in January 2022,” he said. “Green Slip prices continue to be an average of $19 lower as a result of the $91 million SIRA clawed back from insurers in the last profit assessment cycle.”
SIRA expects the need to claw back insurer profit to lessen as insurers understand the volume and cost of claims made under the 2017 motor accidents scheme and price Green Slips accordingly. For this assessment cycle, two insurers received preliminary approval for innovation support that could allow them to retain a small portion of their profit.
