Page 4167 - Week 10 - Tuesday, 21 September 2010
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NRMA’s profit margin has been controlled by Treasury at the same level for five years. Treasury has not permitted NRMA to enjoy the fruits of its monopoly. In view of the innate inefficiencies built into the old CTP scheme and the complacency of monopoly, claims processing costs were high. Treasury intervened. NRMA’s Canberra office has been completely restructured to prepare it for competition. Let us explore the reasons.
The former CTP scheme was 60 years old when the government legislated to replace it in 2008. In other words, it dated from 1948, better known to motorists as the year in which the very first all-Australian Holden car made its debut. The 1948 Holden was exactly what motorists wanted at the time, but of course no-one here would want to buy one today except as a museum piece. Yes, it had four wheels and, yes, it had four doors, but it did not come with a heater or turn indicators. In fact, you had to stick your arm out the window to give hand signals.
In the same way, it is fair to say that the old CTP scheme was well overdue for replacement. Like the clapped-out old car, it was simply no longer performing well. There were next to no knobs or levers that the government could operate to get it heading in the right direction or, indeed, to tell potential insurers where the scheme was heading.
In fact, because it is less than two years since the legislation commenced and because the changes made by it were not retrospective, many of the claims being dealt with by the courts are still claims from the old scheme, chugging along on their meandering, expensive course, leaving not a blue exhaust haze, but an ever stronger scent of money. The increase and volatility in settlement sizes of these old scheme claims is the main reason for the latest increase in premiums. Despite very sound performance by the new CTP scheme, this escalation in premiums and the uncertainty about where they are headed have also acted to discourage additional insurers from entering the ACT market.
Another factor acting to keep premiums higher than they should be is that the frequency of CTP claims per registered vehicle in the ACT is almost double that of New South Wales and Queensland. This is inevitably reflected in the premiums we pay. The ACT has well-built roads, so we should have many fewer crashes and injury claims than we do. The only way to guarantee that the CTP premiums paid by ACT motorists can be lowered in a sustainable way is for ACT motorists to be more aware of their surroundings on the road, extend courtesy and drive more safely.
Members will be conscious that 2010 has been a very bad year on Canberra’s roads. So far no fewer than 18 lives have sadly been cut short. However, that is only the tip of the iceberg. For every fatality on the roads, there are about another 30 people who require hospitalisation as a result of these car crashes. It is an unpleasant reality, but compared to the cost of supporting someone with quadriplegia or a brain injury incurred in a car crash, the cost to the scheme of someone dying in a car crash is quite low. In fact, Australia-wide, costs associated with fatalities average only about four per cent of CTP scheme costs.
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