The Queensland CTP Scheme provides Queenslanders who are injured in a motor vehicle accident due to the negligence of another driver access to common law damages.
Certain CTP insurers and particularly Suncorp Insurance and RACQ have been lobbying for change to the current CTP system to a ‘no fault’ scheme.
Unfortunately, the Queensland Government and the general public are not provided with information from the CTP Insurers which include Suncorp, Allianz, RACQ and QBE regarding their annual financial performance or the gross or net profit they earn from their role or participation in the Queensland CTP scheme.
As the insurers participation in the Queensland CTP scheme is regulated and controlled by the Government, we think it is a bad idea that important information regarding the profits earned or losses suffered by the insurers are not disclosed to the Government or the people of Queensland who pay for CTP insurance with their registration each year.
The persistent lobbying by Suncorp and RACQ for the Government to introduce such a radical change to the CTP scheme did not contain any information from these two insurers regarding their current and historical profits from the scheme or any modelling as to the likely increase in their profit position if the scheme was changed to a ‘no fault’ scheme.
The main argument advanced by the Suncorp and RACQ is that a no fault scheme will provide insurance cover for all Queenslanders and not just those who are lucky or unlucky enough to be injured due to the fault of another driver or motorist.
We are very familiar with how the New Zealand no fault scheme known as the Accident Compensation Commission operates as we have acted for many victims of asbestos disease with respect to claim for compensation for malignant mesothelioma in New Zealand. The current lump sum amount for a victim of malignant mesothelioma is about $150,000.00. In Queensland, we are able to secure compensation or damages for our clients with mesothelioma which is regularly achieved between $500,000 to $1.5 million through a common law claim for damages.
No fault schemes for compensation have the advantage of compensating everyone, however, the level of compensation is low or very low as compared with when people have the right to pursue a common law claim for damages.
We also think a ‘no fault’ CTP scheme would grossly unfair as compared with the current system because the ‘no fault’ scheme would result in lower or significantly lower financial outcomes or payouts people who have been injured due to no fault of their own. Further, people who have caused accidents and injuries to other people will also be compensated including lump sum payments when they have been negligent. We don’t think that sends the right message at all with respect to promoting safe driving if negligent drivers have access to lump sum awards when they have caused an accident.
The Queensland CTP scheme is widely regarded as the best performing scheme in Australia with low premiums compared with other States and Territories while still retaining access to common law damages for road accident victims.
The Motor Accident Insurance Commission published the following information on 12 October 2018:-
Queensland has second lowest CTP premium… and prices have been falling
Therefore, why would our Government and the people of Queensland accept a proposal that would cause injured people to be financially far worse off in a no fault scheme and particularly if our current system has the second lowest premium level in Australia?
We also think that Suncorp and RACQ and indeed all CTP Insurers should be required by the Government to publish their financial performance at the end of each financial year so we can all see how much profit each insurer is making from the scheme. We think it is wrong for CTP insurers to lobby for such a major change to the current system which is working very well to a system which would significantly short change injured people without the insurers disclosing their likely financial benefit or potential windfall of additional earnings or profits from their proposed ‘no fault’ scheme.
Approximately 17 years ago, the Government introduced a series of legislative changes which were designed to make the current CTP scheme more profitable and to reduce the number of smaller ctp claims by making them financially unviable for people to pursue.
The most recent statistics and information published by the Motor Accident Insurance Commission reveals the following:-
With respect to claim size:-
The average finalised claim size has exhibited a longstanding decreasing trend. The average claim size assumption used for premium setting decreased significantly over 2017 in response to this experience.
With respect to the likely increases in profit and profit margins for CTP Insurers in the current system:-
Finally, we note that our estimates of the projected ultimate average claim size for future underwriting quarters have been decreasing in real terms for at least the last five years, as evidence of a weakening severity profile and lower than expected finalisation sizes has emerged. At any point in time, our measurement of the emerging claim size for the most recent underwriting periods will be almost the same as our then current projected ultimate average claim size for future underwriting quarters. As the latter falls, our assessment of profit increases. The result is that our measurement of profit for any given underwriting quarter has grown at each successive measurement. If the current trends in severity profile and claim size continue, this pattern of increasing profit assessment is likely to continue.
We think that if the current CTP scheme is working well, provides common law damages for injured people, is profitable for the insurers and provides registration payers with the second lowest premiums in the nation then why are Suncorp and RACQ lobbying for such a dynamic change which would result in significant lower financial outcomes for innocent people who have been injured due to no fault of their own?
We think that CTP insurers should and must be required to disclose their financial position and the profits they have been making [or not making] over recent years and the likely additional profits they will make if the Government is to consider their push for a ‘no fault’ scheme.
If the disclosure from the CTP insurers regarding their financial positions demonstrates that their current business model is profitable and the modelling of a ‘no fault’ scheme would only serve to drive up insurer profits and decrease financial outcomes for injured people then the Government should immediately reject any suggestion for a change in the current CTP system which has and continues to work well.
This blog was written by Greg Black, Director
Phone: 3379 2513 or Toll Free 1800 316 716