House of Assembly: Tuesday, October 14, 2014

Contents

Motor Accident Commission

In reply to Mr MARSHALL (Dunstan—Leader of the Opposition) (17 July 2014). (Estimates Committee B)

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy, Minister for Small Business): I have been advised:

There are currently three privatised compulsory third-party (CTP) insurance schemes in operation in other states (Queensland (QLD), New South Wales (NSW) and Australian Capital Territory (ACT)) that have been in place for a long time; however, they vary in regulatory models and price setting mechanisms.

In summary for each scheme:

QLD Model: The QLD CTP scheme is a community related scheme with a strong price regulated arrangement. However, under this strongly regulated arrangement there is more limited choice in CTP insurer. In general terms, the premiums have remained relatively stable in QLD.

NSW Model: The NSW CTP scheme is primarily a risk rated scheme with insurers having flexibility in premium price setting. The scheme is a file and write arrangement and premiums are based more on the risk characteristics of the motorist; however, there is greater choice of insurer. In real terms as a percentage of average weekly earnings (AWE), average premiums have reduced from about 42 per cent of AWE in 2000 to around 34 per cent of AWE today.

ACT Model: The ACT CTP scheme until recently had only one CTP insurance provider (NRMA). The scheme has now been opened up to further CTP insurers. Premium experience under the new arrangements has not been established at this point.

The advantage for the South Australian government is that a model can be adopted that will be best practice based on the experience of the other privatised states and allows for striking a balance between the regulation of price/price control and ensuring the consumer (motorists) having a choice in insurer and so allowing for a competitive CTP insurance market to exist.