The reforms to the motorcycle CTP Insurance introduced in NSW on 1st December 2017 have generated a number of concerns – too expensive, complaints that are insurers denying valid claims, money not getting to accident victims, and combative insurers.
The MCC of NSW are championing riders, ensuring they are getting the best possible deal under the new motorcycle CTP insurance scheme.
SIRA industry watchdog for CTP insurance
MCC of NSW continues to have regular meetings with the State Insurance Regulatory Authority (SIRA), the industry watchdog for motorcycle CTP insurance. Recently we have talked about:-
· Transitional Excess Profit or Losses mechanism
On the 11th February 2020, SIRA presented to the committee, the Transitional Excess Profit or Losses mechanism (TEPL). This mechanism will function to ensure CTP Insurers were, on average, only making an 8% profit.
The flaw in the TEPL as we see it, is that it will only calculate profit for the scheme as a whole – not at a level to ensure each rider isn’t paying more than 8% as ‘profit’.
· March 2020 quarterly meeting with SIRA
On the 5th March 2020, the MCC of NSW attended one of our regular quarterly meetings with SIRA. We were given an update on the number of motorcycle claims since the new scheme was introduced on 1st December 2017.
· Motorcycle CTP insurance claims
The number of claims is tracking well below what was predicted when the scheme was introduced. To date, 82% of motorcycle claims are “at fault for the purposes of CTP” whereas only 17% of metropolitan car claims are “at fault for the purposes of CTP”.
· Calculating Motorcycle CTP Insurance premiums
The MCC were concerned that insurers may have been using the ‘bonus/malus’ provisions of the scheme as a means to increase premiums. The Collins English Dictionary definition of malus being “a financial penalty incurred by a trader, investor or banker when an investment or deal results in a loss”
In CTP the ‘bonus’ provision allows an insurer to reduce the premium if they consider a rider has a low risk of being involved in a crash.
In CTP the ‘malus’ provision allows an insurer to increase the premium if they consider a rider has a high risk of being involved in a crash.
An investigation by SIRA has revealed that the “bonus/malus” provision is neutral. That is, where ‘malus’ has been applied in one case, this is offset by a ‘bonus’ to another rider.
· At our next SIRA meeting
At our next quarterly meeting, SIRA will present ‘Relativities’. This is used by the insurers to determine what motorcycle premiums will be compared to the Class 1 of vehicles. Class 1 being metropolitan cars.
State Government Minister meeting
Following on from this meeting with SIRA, we met with the State Minister for Customer Service, Victor Dominello MP on 19th February 2020. We expressed our concerns that the TEPL only calculates profit for the scheme as a whole.
We proposed other options and means by which we can ensure riders are getting the best possible deal. The Minister has since written to us acknowledging our concerns and urging us to continue to liaise with SIRA regarding these and any other matters.
We will continue to keep you in the loop on any further developments regarding Motorcycle CTP insurance. If you have any questions please contact us here.
Our next survey will be gathering riders’ views on how, in the medium to long term, the CTP insurance scheme could be changed to give riders a better deal. This will be conducted in April/May 2020. Watch our Facebook page for the survey link.