Compulsory Third Party insurance: Reforms will fight fraud and cut cost of green slips

A NEW CTP insurance system where those with minor injuries like whiplash receive a set amount of compensation, ending costly court battles, will be introduced by the Baird government.

CTP reforms to fight insurance fraud

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A NEW Compulsory Third Party insurance system where those with minor injuries like whiplash receive a set amount of compensation, ending costly court battles, will be introduced by the Baird government in an attempt to cut ballooning “Green Slip” bills.

Better Regulation Minister Victor Dominello will kick off his attempt to introduce Green slip reform today by announcing a taskforce to crack down on Green Slip fraud which the minister says is costing us $75 a year on our Green Slip bills.

Mr Dominello says that CTP prices have risen by more than $40, or eight per cent, in the past year, and fraud is a key contributor.

He says the government is seeing claims where there are single car accidents with lots of claimants, sometimes more than the car can seat, and claims for a range of injuries when the vehicle was travelling at low speed and there was little or no damage to the car.

There are also instances where claims are made on behalf of babies, after minor low speed accidents, for psychological injuries and “future lost income”.

The claims are costing on average between $95,000 and $100,000. The average green slip costs more than $600 and exceeds 34 per cent of average weekly earnings compared to 28 per cent in 2007.

Mr Dominello is determined to reform the area and The Daily Telegraph understands that reform, to be introduced later this year, would involve a two-tiered system, where less serious claims involve set payouts, as occurs with the workers compensation scheme.

Previous ministers have failed to reform the system, under criticism that they are favouring insurance companies over victims and their lawyers. Insurance companies are accused of profiting by as much as 20 per cent from the scheme.

“Both the insurance sector and the legal fraternity will need to come together with the government so we are all acting in the interests of the consumers,” Mr Dominello said.

“In this case, it’s the interests of the motorists and those injured.” On the table previously has been the prospect of introducing a “no-fault” scheme similar to Victoria, to prevent costly legal battles where people argue over which party was at fault. This would now likely be introduced, at least for minor injuries, to have a quicker and cheaper scheme. CTP Prices for the average Sydney motorist have increased by more than 70 per cent on average across NSW since 2008 and further price rises of $60-90 — or 10-15 per cent — have been flagged by insurers as a result of recent claims trends including fraud, the government says.

CTP Prices for the average Sydney motorist have increased by more than 70 per cent on average across NSW since 2008.

“The NSW Government has identified an alarming rise in suspected fraudulent CTP claims. This is unfair and cheats all punters who end up paying higher green slip prices,” Mr Dominello said, “A dedicated fraud taskforce is being established to crack down on this issue and identify ways in which it can prevented.” “This is a very serious issue and I strongly urge anybody who suspects fraud to report it to the newly established CTP Fraud Hotline on 1800 600 444.” The taskforce, chaired by the Chief Executive of the State Insurance Regulatory Authority, Anthony Lean, will make recommendations to the NSW Government on strategies to deter, detect and respond to fraudulent CTP claims.

The taskforce will also develop an “education awareness campaign that will inform the public on fraud being a community issue”, the minister’s office said, with representatives from the legal, insurance and health sectors involved.

Recent examples of fraud that have been brought to the government’s attention include where a 40 year old man had a minor accident, saw his friend’s GP who suggested a scan, physiotherapist and a compensation lawyer. The man was keen to return to work. The first free consultation with the lawyer resulted in advice that his claim for expenses would be less if he returned to work.

In another case, a 32 year old woman had an accident. She claimed for loss of income due to not being able to start a new $200,000 a year job. The insurer found she had an irregular work history, had fabricated details about her new job, and had previously claimed for the same injury a few years earlier.

And a 25 year old man claimed he was in the back seat of a car, with others, during a motor accident. A claims officer queried the claim as there were more people in the car than seats. Further investigation showed the man was not in the car when the accident occurred.