Cheaper Green Slips are now guaranteed
State Insurance Regulatory Authority (SIRA) Chief Executive Adam Dent has taken the final decision to claw back almost $91 million in insurer profits.
Under the motor accidents legislation, CTP insurers have a 28-day cooling off period to appeal the decision to recover excess profit.
Mr Dent said that the insurers’ right to appeal his decision expired on Monday 29 November 2021.
“With no insurer appealing my decision to recoup excess profit, it’s now guaranteed that NSW motorists will enjoy cheaper Green Slips in 2022,” Mr Dent said.
“My decision targets only pure profit taken by insurers, so does not affect the treatment, care or benefits of injured road users.
“Excess insurer profit will be redistributed among motorists through a 35% reduction in a levy that forms part of the cost of a Green Slip.
“Motorists can expect to save an average of $19 when they take out a policy from 15 January 2022.”
SIRA can control the level of insurer profit through the transitional excess profits and losses (TEPL) mechanism that was introduced in the 2017 CTP reforms.
Mr Dent said that this was the first time SIRA had used the mechanism to claw back excess insurer profit.
“The long-tail nature of the CTP scheme makes predicting future claims costs uncertain. This is the first time there has been enough certainty of claims costs to activate the mechanism,” Mr Dent said.
“I have targeted insurer profit above 10% on claims lodged in the first accident year of the new scheme.
“It is likely that insurers made excess profit in other accidents years, so I expect that I will need to reactivate the mechanism in the next assessment cycle.
The 2017 CTP reforms also introduced innovation support that allows insurers to apply to retain up to 3% of profit on Green Slips.
Mr Dent said that SIRA could grant innovation support when insurers invest in measures that improve outcomes for injured road users or road safety for motorists.
“I have granted preliminary approval to one insurer for an innovation that is focused on clinical and recovery management,” Mr Dent said.
“I will make a final decision on whether the insurer should retain a portion of its profit after it has proven that the innovation delivers measurable benefits to injured people.
“For the next assessment cycle, I expect insurers to place a stronger focus on innovation to improve recovery outcomes for people injured on the road.”
SIRA will undertake its next assessment of insurer profit in 2022.