NSW Insurers pocketing billions after new law passed
Insurance companies have been accused of pocketing almost $4 billion in just 16 months at the expense of injured motorists since the state government reformed its green slip scheme.
The reforms, introduced in December 2017, were meant to reduce the cost of green slips, stamp out injury fraud and make it fairer for motorists to claim compensation.
But instead motor accident victims are being short-changed while insurers reap super profits, the NSW Bar Association claimed yesterday.
"At this point … the vast majority of green slip premiums paid is ending up in the pockets of insurers," Bar Association president Tim Game SC said.
"It is apparent that the original actuarial assumptions upon which the scheme is premised are deeply flawed."
The Bar Association made its comments in a submission to a review by the State Insurance Regulatory Authority (SIRA) of the new definition of minor injuries under the scheme. The reforms were meant to elbow lawyers out of the action and instead pay injured drivers directly for their treatment without having to go to court.
Latest figures on the SIRA's website reveal that between December 2017 and March this year, more than 7.8 million green slip policies were issued at an average cost of $502, a total of more than $3.915 billion.
Since then, the average green slip cost has gone down to $492.
Yet just $132.3 million has been repaid to motorists in weekly payments, treatment, care, funeral expenses and "insurer costs".
Another $212 million had been refunded to drivers as the difference between the old CTP slips and the new one.
Under the new scheme, insurance companies are only allowed to make 10 per cent profit and any more can be clawed back by the government.
But sources said they had to let the insurers build up the compensation pot because it takes up to six years for catastrophic injuries like paraplegia to be paid and the cost of lifetime treatment for each of those injuries will be millions. Previously they just received a one-off payment.
In its submission to the SIRA, the Bar Association said the government had got its sums wrong and fewer motorists were receiving compensation than had been budgeted for, with only 17,403 claims instead of the 30,000 predicted.
Mr Game said that victims suffering "minor injuries" receive statutory benefits under the scheme for a strictly limited period, yet the definition of "minor injury" was so expansive it can capture injured people who may never return to work. And he said insurers had been able to take complete control of the claims process, spending over $1 million per month defending claims.
A SIRA spokesman said that without the new scheme, green slips would have been well over $700.
"Insurer super profits exceeded 30 per cent at times under the old scheme. Now SIRA has the power to cap profits," the spokesman said.