The green slip scheme as we know it today was introduced in 1999 but, since 2008, premiums have risen by 70%. Many motorists are already paying $600 or more for their green slip and may have to fork out a further 10-20% in 2016 unless the system is changed.
Minister for Innovation and Better Regulation, Victor Dominello, says NSW premiums are the least affordable in the country.
He has just announced an important review of the NSW CTP scheme, last carried out in 2013. The purpose of this review is to:
- Increase the proportion of benefits for most seriously injured road users
- Reduce the time it takes to resolve a claim
- Reduce opportunities for claims fraud
- Reduce the cost of green slip premiums.
Currently only 45% of premiums actually go to benefits for the 16,000 injured road users. The rest goes to:
- Insurer profit (19%)
- Insurer expenses (15%)
- Legal and investigation expenses (18%)
- Administering the scheme (3%).
Fault-based scheme
Part of the problem may be the nature of the scheme. It is a common law fault-based scheme, which has to establish fault, negotiate entitlement and agree on a settlement amount before the claim can be paid. This process can can take 3-5 years, leaving the injured person in limbo.
Because insurers do not know how much a claim will cost so far into the future, they factor in uncertainty. This makes premiums higher in the short term. The long-term average profit for insurers is 19%, more than double what the insurers filed when setting prices.
Legal costs now exceed medical costs in the scheme. The fault-based process has led 83% of claims to use legal representation, compared to 71% in 2008. Up to 10% of claims could even be fraudulent or exaggerated.
Not all states and territories have a common law fault-based scheme. While NSW, Qld, WA and the ACT are mainly fault-based, Vic, Tas and NT have no-fault or hybrid systems.
Discussion paper
The NSW government has issued a discussion paper setting out four new options:
- Retain fault-based scheme but improve processes with no change in benefits (NSW, ACT)
- Retain fault-based scheme but improve processes and adjust benefits (Qld, SA, WA)
- Move to a hybrid no-fault, defined benefits scheme for minor injuries with common law benefits for serious injuries (Vic, Tas)
- Move to a fully no-fault, defined benefits scheme with caps, thresholds and no common law (NT, NZ).
Interested parties have until 22 April 2016 to make their submissions. Greenslips.com.au will follow this topic closely for the benefit of our readers. Also see our News item on the proposed changes to greenslips for ride-sharing services like Uber and GoCar.
your opinion matters: