The Queensland 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 Motor Insurance (CTP) scheme.
The release of the paper comes after Treasurer and Secretary for Trade and Investment Cameron Dick asked MAIC – which oversees the scheme – to review the programme.
MAIC says the last review occurred in 2016 and it is appropriate to take a fresh look at the scheme to ensure it continues to work for Queenslanders.
It says the review will not consider any changes to the process for setting up CTP premiums or compensation benefits for injured people.
“As such, this review will focus on identifying opportunities to maintain and improve Queensland’s position as the most affordable CTP scheme on the mainland by looking at questions about aspects of scheme performance that could be improved,” says the discussion paper.
“The scheme was most recently reviewed by MAIC in 2016 and the actions taken as a result of the 2016 scheme revision have helped keep the cost of CTP insurance affordable for the average driver.
“However, the lack of competition among insurers in setting premiums (a major goal of the system) remains an ongoing challenge.”
The discussion paper says the persistent lack of price competition among the four authorized participants in the program — Suncorp, Allianz, QBE and RACQ — indicates that the key objective behind the privately subscribed model is unlikely to be achieved.
“In this context, there is merit in exploring whether changes to the scheme’s design might lead to results more consistent with the objectives of the scheme,” the paper says.
The paper identified three scenarios for consideration by key stakeholders and the wider community.
The first scenario recommends maintaining the status quo; The second scenario suggests keeping the current privately subscribed model with chart design changes; In the third scenario, the transition to the IPO model.
The RACQ has welcomed the review and says it has recommended equalization to the state government.
“All we’re asking is that for every dollar of CTP risk we hold in the scheme, we receive the same level of premium, and if the insurer carries less risk, they get a lower premium. That’s fair,” CEO David Carter said. .
“A change like this will not affect motorists or the amount you pay for the cash transfer programme, nor will it affect any other professionals, including legal and health practitioners, who work in the scheme.”
According to the discussion paper, changes under the second scenario will include the introduction of an annuity equalization mechanism.
The paper says the premium equalization mechanism could encourage continued participation of existing insurers and attract new insurers to enter the Queensland CTP scheme.
The Australian Bar Alliance also welcomed the review but said it could not comment specifically on the premium equalization proposal.
“The premium equalization proposal, and any other potential options, must be carefully considered by the government to ensure the CTP remains robust, works for affected people and promotes competition,” said Sarah Grace, the group’s Queensland chairwoman.
“We expect that during the review process there will be calls from some insurers to make substantial changes to our scheme, by stripping injured motorists of their rights.
We’ve seen calls for divestment in the past, driven purely by insurance companies looking to increase their profitability. Queenslanders take the protection of their legal rights very seriously and are ready to fight to protect those rights.”
The application deadline is April 21st.
Click here to access the discussion paper.
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