Queensland reviews CTP scheme
Queensland’s Motor Accident Insurance Commission (MAIC) has released a discussion paper seeking feedback on ways to improve the sustainability of the state’s compulsory third party (CTP) motor insurance scheme.
The release of the paper comes after Treasurer and Minister for Trade and Investment Cameron Dick asked MAIC – which oversees the scheme – to review the program.
MAIC says the last review occurred in 2016 and it is appropriate to conduct a fresh look at the scheme to ensure it is continuing to work for Queenslanders.
It says the review will not consider any changes to the CTP scheme’s premium setting process or compensation benefits for people who are injured.
“As such, this review will be focused on identifying opportunities to preserve and improve Queensland’s position as the most affordable mainland CTP scheme by considering questions around aspects of scheme performance that can be improved”, the discussion paper says.
“The scheme was last reviewed by MAIC in 2016 and actions taken as a result of the 2016 scheme review have helped keep the cost of CTP insurance affordable for the average motorist.
“However, a lack of competition between insurers in the setting of premiums (a key objective of the scheme) remains an ongoing challenge.”
The discussion paper says the ongoing lack of price competition between the scheme’s four licensed insurer participants – Suncorp, Allianz, QBE and RACQ – indicates that the key objective underlying the privately underwritten model is unlikely to be realised.
“In this context, there is merit in exploring whether scheme design changes may generate outcomes more consistent with the objectives of the scheme,” the paper says.
The paper has flagged three scenarios for consideration by key stakeholders and the wider community.
Scenario one recommends maintaining the status quo; scenario two suggests keeping the existing privately underwritten model with scheme design changes; and in the third scenario transition to a public underwriting model.
RACQ has welcomed the review and says it had recommended premium equalisation to the State Government.
“All we are asking is for every dollar of CTP risk we hold in the scheme, we receive the same level of premium, and if an insurer holds less risk, they receive less premium. That’s fair,” CEO David Carter said.
“A change like this would not impact motorists or how much you pay for CTP, nor would it impact any other professionals, including legal and health practitioners, who work in the scheme.”
According to the discussion paper, changes under scenario two would include the introduction of a premium equalisation mechanism.
The paper says a premium equalisation mechanism may encourage the ongoing participation of existing insurers and attract new insurers to enter the Queensland CTP scheme.
The Australian Lawyers Alliance also welcomed the review but says it can’t comment specifically on the premium equalisation proposal.
“The premium equalisation proposal, and any other potential options, need to be carefully considered by the government to ensure our CTP scheme remains strong, works for the benefit of injured people and competition is fostered,” the group’s Queensland President Sarah Grace said.
“We expect that during the review process there will be calls from some insurers to make fundamental changes to our scheme, by stripping rights off injured motorists.
“We’ve seen calls for rights to be stripped in the past, motivated purely by insurers looking to increase their profitability. Queenslanders take the protection of their legal rights seriously and are prepared to fight to protect those rights.”
Closing date for submissions is April 21.
Click here to access the discussion paper.
