Compulsory Third-Party Insurance

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy, Minister for Small Business) (14:04): I seek leave to make a ministerial statement.

Leave granted.

The Hon. A. KOUTSANTONIS: I rise to inform the house of the latest progress in the government's continuing commitment to implement a market-based model for the private sector provision of compulsory third-party insurance. As part of the 2014-15 state budget, the government announced that from 1 July 2016 the Motor Accident Commission would cease its role as the sole provider of compulsory third-party insurance in South Australia. Since this time, considerable work has been undertaken to identify the best model for the future private sector provision of compulsory third-party premium insurance in South Australia.

Ms Redmond interjecting:

The SPEAKER: I call the member for Heysen to order.

The Hon. A. KOUTSANTONIS: We are working on the expert advice of the lead commercial adviser, PricewaterhouseCoopers, to develop an efficient and sustainable private sector CTP insurance market. The new private sector CTP insurance market model will continue to meet the needs of motorists and persons injured in a motor vehicle accident, while contributing to an efficient, competitive and viable CTP insurance industry in South Australia. The market design model is—

Ms Redmond interjecting:

The SPEAKER: The member for Heysen is warned.

The Hon. A. KOUTSANTONIS: —expected to maximise value to the government from CTP insurance reforms, allowing the Motor Accident Commission to run off its claims against insurance policies and remove the government's residual risk by its guarantee of the CTP fund. A sum of $852.9 million has already been realised from the Motor Accident Commission's surplus assets and was paid into the Highways Fund in December 2014. A further $300 million is scheduled to be returned to the government in 2016-17.

In establishing a private market for the provision of CTP insurance, the next steps are first to conduct market soundings and then undertake an expression of interest and a request for tender process.

Ms Redmond interjecting:

The SPEAKER: The member for Heysen is warned a second and final time.

The Hon. A. KOUTSANTONIS: This will then be followed by a licensing process to appoint the new private CTP insurance providers and prepare them to serve motorists from 1 July 2016. The proposed private sector model will include:

a multi-provider market with a set number of eligible insurers for the first three years;

premium prices will remain fixed for the first three years with CPI-like increases to ensure a smooth transition for both insurers and motorists;

transition to a fully contestable market from year 4;

an industry specific CTP regulator responsible for setting and controlling premiums and ensuring they remain reasonably priced; and

the Department of Planning, Transport and Infrastructure will continue to issue CTP insurance renewal notices and provide premium collection services as part of the vehicle registration process.

The government has met with our counterparts in Queensland and New South Wales to ensure that we learn from their experiences and adopt a model that will be best practice.

Mr Tarzia interjecting:

The SPEAKER: The member for Hartley is called to order.

The Hon. A. KOUTSANTONIS: In line with the government's 2014-15 budget announcement, MAC will continue to fulfil its existing non-commercial roles for road safety and administering the nominal defendant arrangements. Importantly, the private sector provision of CTP insurance will not affect the Lifetime Support Scheme, which was established on 1 July 2014 to cater for those who have been catastrophically injured as a result of a car accident.

As we continue down the path of CTP insurance reform, the government will continue to engage widely with key stakeholders to ensure a smooth transition with minimal impact on motorists. We are confident that the private sector provision of CTP insurance is in the best interests of the state, and our key focus remains on ensuring we have a scheme which is fair, efficient and affordable for South Australian motorists.