State Insurance Regulatory Authority (SIRA) is clawing back $178.7 million in excess profit made by green slip insurers. This is insurer profit in 2018 and 2019, above 10%, after injured road users have received their treatment and care.
Where will excess insurer profit go?
The excess profit will go straight into the Motor Accidents Operational Fund. It will help offset price rises from 15 January in 2 Fund levies:
- Motor Accident Injuries Treatment and Care Benefits Fund levy (up 47.3%)
- Lifetime Care and Support Authority Fund levy (up 19.9%).
SIRA states this excess profit will help offset levy increases and maintain the $19 saved on each green slip from clawback of insurer profit in January 2022. At the time, vehicle owners paid 35% less for total Fund levies, equivalent to $91 million in excess profit.
What are excess insurer profits?
The regulator uses the clawback mechanism if insurer profits rise above a limit of 10%.
SIRA and insurers have been working to understand the profitability of providing green slips under the new CTP scheme. When it began on 1 December 2017, insurers did not know how many claims people would make under the new scheme.
Insurers now have more information about the volume and cost of claims and, consequently, how to price green slip premiums. This means the need for clawback of excess profit should reduce over time.
What is the average price of a green slip?
The average green slip price for people using the greenslips.com.au Calculator has fallen from $699 in the 12 months before the new scheme started to $545 for the 12 months ending December 2022.
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