Green slip insurers pocket 20 cents of every dollar as premiums soar

GREEDY automotive insurers are pocketing almost 20 cents in every green slip dollar while the price of premiums continues to soar.

A parliamentary review into the CTP insurance industry found that the big four insurers licensed to sell cover have pocketed an “unacceptably high” $2.91 billion profit in recent years.

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GREEDY insurers are pocketing almost 20 cents in every green slip dollar while the price of premiums continues to soar.

The NSW government is proposing to reduce the benefits paid to the majority of car accident victims on the grounds of spiralling green slip costs.

But a parliamentary review into the CTP insurance industry found that the big four insurers licensed to sell cover — Suncorp (including AAMI and GIO), Allianz, the NRMA and QBE — have pocketed an “unacceptably high” $2.91 billion profit in recent years.

Insurers’ were consistently predicting profits of just eight cents in the green slip dollar, causing premiums to continue to rise to ensure the industry’s viability, the review found. Yet their real profits were closer to 19 cents in the dollar.

Better Regulation Minister Victor Dominello has publicly blamed a spike in fraudulent claims for the rise in premiums, following the release of the review’s report last month confirming a sharp rise in minor injury claims since March last year.

But the insurance industry’s practice of under-reporting expected profits, leading to an “unacceptably high level of insurer profits in the scheme” according to the report, has been quietly ignored.

By making the scheme less volatile the proposed reforms would make it easier for insurers to predict how much capital they need to set aside to pay future claims.

So have the report’s finding that insurance companies’ practice of “leakage” — where insurers pay out on suspect claims because the cost of investigating and fighting the claim would cost more — may be contributing to the rise in fake claims.

At the same time the government has set up a $1.2 million dedicated taskforce to crack down on CTP fraud, funded by taxpayers not the insurance industry.

Labor’s Better Regulation spokeswoman, Yasmin Catley (pictured) said everyone was in fierce agreement that CPI fraud needed to be tackled, but the elephant in the room was the insurers.

“All the minister wants to talk about is dodgy lawyers and fraud, not insurers’ super profits,” she said.

“Now we have this taxpayer funded taskforce to crack down on CPI fraud when it should be the insurers’ responsibility to investigate fraudulent and exaggerated claims.”

Ms Catley described it as “curious” that the Insurance Council of Australia’s general manager of government and stakeholder relations is Richard Shields, the NSW Liberal Party’s former director of party affairs.

ICA spokesman Campbell Fuller said the council “employs professionals from various political and industry backgrounds to advocate policy outcomes, not political ones.”

By making the scheme less volatile the proposed reforms would make it easier for insurers to predict how much capital they need to set aside to pay future claims, he said. As for paying out on fraudulent claims, this was a commercial matter for each insurer, he said.

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