Regulator accuses Suncorp of exaggerating concerns about CTP pricing

INSURANCE regulator accuses Suncorp of exaggerating concerns about profits in compulsory insurance scheme — which drivers pay for.

“Suncorp has a history of raising concerns that don’t come to pass,” regulator passes judgment on the insurer’s pleas about profits.

THE STATE’S top insurance regulator has accused Suncorp of exaggerating concerns about profitability in Queensland’s compulsory car insurance scheme.

“Sun (Suncorp) has a history of raising concerns that don’t come to pass,” the regulator wrote in an email to Treasurer Curtis Pitt’s office. “History shows this in their ... profits year on year.”

The email was among documents obtained exclusively by The Courier-Mail under Right to Information laws about profits in the compulsory third party (CTP) scheme.

The documents further detail estimates that insurers had earned profits of at least 25 per cent between 2004 and 2014 — almost three times above what regulators had anticipated they would earn.

Suncorp did not directly answer some questions but told The Courier-Mail it tried to accurately assess risks and had sought reforms for a “sustainable and affordable CTP scheme”.

CTP must be paid for all Queensland vehicles. Car drivers currently pay $352.60 for a year’s insurance.

But that pricing is reviewed every quarter. The regulator Motor Accident Insurance Commission (MAIC) sets a ceiling and floor price and all four insurers currently charge the top allowable price.

Still, insurers have complained in recent years about scheme profitability. Suncorp — which has almost 50 per cent of the CTP market — had argued “pricing for the future is not adequate to cover the cost of future claims”.

The documents show Suncorp was to speak to Mr Pitt in June last year, so one of the Treasurer’s advisers pre-emptively sought information from MAIC’s Insurance Commissioner Neil Singleton

Mr Singleton wrote he had recently spoken with Suncorp partly to discuss “retrospective profit”.

“Suncorp don’t dispute their strong retrospective CTP profitability but are concerned that MAIC will cut into their margins too far prospectively,” he wrote.

He added Suncorp representatives had complained “my board won’t sign off” on some assumptions. “I flagged that was an unnecessary red-flag style response,” he wrote.

PRICES ‘BELOW APPROPRIATE LEVEL’

Suncorp had also complained that regulatory pricing in 2017’s first quarter was “below the appropriate level” and MAIC “has a deliberate plan to reduce” insurer returns, according to a separate briefing note.

Another note said Suncorp in August had raised concern the regulator was not adequately accounting for “pressures” such as falling returns on government bond investments and a rising number of claims.

MAIC responded it had concerns about a 10 per cent rise in claims despite road crashes declining.

It investigated concerns about links to “claims farmers”, as reported in The Courier-Mail. Claims farmers can cold-call people to try and fish details about any car crashes, passing these on to law firms for a fee.

Suncorp told The Courier-Mail that CTP was “experiencing significant challenges with claims frequency continuing to rise” and risks “must be priced accordingly”.

Insurers RACQ, QBE and Allianz declined to answer queries about profitability.

The CTP scheme is under review and The Courier-Mail last year reported on how MAIC estimated insurer profits had been up to 31 per cent in the past five years.

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