CTP insurance revamp will link premiums to crash history

THE State Government is doing something about the “excess profits” reaped by compulsory third party insurers. But how much you benefit will depend on one thing.

• Insurers face $100m profit hit
• Treasury’s ‘misleading advice’
• Lawyers clash with insurers

DRIVERS could pay different levels of compulsory car insurance based on their crash risk, under a plan to deal with eye-watering price gouging that is lining insurers’ coffers.

The Sunday Mail can reveal a review quietly delivered to the State Government last week into the compulsory third party (CTP) scheme slammed the “persistent excess profits” being reaped by QBE, Suncorp, RACQ and Allianz.

“While the committee does not expect insurers to make consistent losses, it is concerned about persistent excess profits while motorists have been seeing little if any price competition,” the Motor Accident Insurance Commission report says.

Treasurer Curtis Pitt has ordered work on whether a “risk rating” system can be brought in to shave down annual bills, currently $352.60, as recommended by the review.

It would mean drivers with lower crash ratings – based on their driving records, demerit points, crash history and the car’s safety features – would pay less than others.

Tracking technology could also measure who is a safe and unsafe driver in the future and lead to discounts, it says.

But the report’s authors warn charging unsafe drivers more could result in a spike in unregistered cars being driven by those no longer able to pay.

Young people with high crash risks might also be unfairly affected.

The idea is one of 15 recommendations Mr Pitt has accepted to reform CTP insurance, which is paid with registration and insures against injuries. Another includes requiring lawyers to provide the Motor Accident Insurance Commission with details about legal costs they charge for claims to make sure they are not gouging.

Four companies offer CTP, but all charge the same – historically just $3 under the maximum allowed “ceiling” price.

The commission says insurers have been crying poor while making profits of up to $80 on every policy – almost four times the anticipated 8 per cent profit margin.

The committee scratched one idea of clawing back profits retrospectively from insurers because it was likely beyond the state’s taxing powers, but proposed other changes in setting premiums.

QBE said it strongly supported risk rating, but Allianz did not.

Suncorp was happy with recommendations but was disappointed in a failure to address claimants’ benefits and legal costs, and RACQ said it was working with the Government.