Page 1107 - Week 04 - Tuesday, 5 April 2016
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premiums for GIO and AAMI were lowered further from September 2015, resulting in further increases in market share for these brands. Suncorp’s continued competitive stance and offering of premium reductions, the growth in their market share and price sensitivity all highlight just how enthusiastic ACT motorists have been to embrace competition.
Competition has also led to a greater choice in product offerings and better quality products such as at-fault driver cover. The NRMA, GIO and APIA now provide at-fault driver cover, with at-fault drivers now able to receive lump sum benefits for specified injuries.
Another great outcome over the review period has been the increased use of the motor accident notification form—MANF—claims process. In 2009, the year after the MANF claims process was introduced, approximately six per cent of all claims were MANF claims. Over the review period, this has risen to 13 per cent. The MANF changes to the CTP scheme were made in 2008 as a way of reducing the time taken to access treatment for smaller claims, claims up to $5,000. The higher use of the MANF claims and the lower average cost have contributed to insurers being able to lower premiums. But importantly, this has also meant that claimants are getting quicker access to treatment.
It is also noted that the lifetime care and support scheme introduced by my government, which provides payments to persons catastrophically injured in motor vehicle accidents, has also led to a once-off reduction in CTP premiums. However, Madam Speaker, the review has found that there are a number of issues hampering the operation of the CTP scheme.
The ACT’s CTP scheme is primarily a common-law system with few qualifying thresholds or caps on some heads of damage. This scheme structure has a strong effect on the claim costs, and these claim costs contribute to high premiums.
A high proportion of premiums in our CTP scheme go towards the costs of pain and suffering and legal costs. In comparison with similar common-law-based schemes in New South Wales and Queensland, the proportions in our scheme are high. A table in the review shows that pain and suffering and legal costs represent 61 per cent of total costs paid out by the scheme relative to New South Wales, at 32.5 per cent, and Queensland, at 31.5 per cent. These high costs reflect scheme inefficiency and are ultimately to the detriment of the treatment and care benefits paid to injured parties to assist in their speedy recovery.
Despite the recent decreases in premiums, the affordability of ACT CTP policies continues to compare unfavourably with other jurisdictions. The ACT’s premiums are still the second highest after New South Wales, with this high premium attributable to the scheme design.
The review also notes that the generous scheme design relative to other common-law schemes limits the potential to deliver significant future cost-of-living reductions. The actuary specifically states that reform of the scheme design will be required in order to deliver further significant premium reductions in the future.
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