Bills

Motor Vehicles (Compulsory Third Party Insurance) Amendment Bill

Introduction and First Reading

The Hon. R.I. LUCAS (Treasurer) (15:21): Obtained leave and introduced a bill for an act to amend the Motor Vehicles Act 1959. Read a first time.

Second Reading

The Hon. R.I. LUCAS (Treasurer) (15:22): I move:

That this bill be now read a second time.

This bill is about maximising benefits for South Australian motorists by providing a fair and competitive compulsory third-party insurance scheme. In 2016, the former government approved four private insurers to underwrite the CTP scheme and established an independent CTP regulator to oversee insurers and the scheme. The CTP scheme is in a period of transition to a market-based competition model. The competition model will begin on 1 July 2019 and apply to CTP insurance policies which commence from 1 July 2019. Since 1 July 2016, motorists' CTP insurance policies have been automatically allocated to approved insurers. This autoallocation will no longer apply after the expiry of the transitional period on 30 June 2019.

This bill will enable the continuation of autoallocation for new vehicle CTP policies after the commencement of the competition model. The autoallocation will occur based on a scheme determined by the minister rather than enshrined in the legislation. The proposed scheme will allocate new vehicle policies according to approved insurer market share at the lowest premium price offered for the premium class by any of the approved insurers at the time of allocation. Autoallocation will not apply to renewal of CTP insurance policies.

The continuation of autoallocation for new vehicle policies will remove the possibility of commissions and inducements being offered by insurers to motor vehicle dealers to acquire CTP business where there is no direct benefit to the motorist. Experience from other jurisdictions is that commissions paid by insurers to intermediaries, such as motor vehicle dealers, hinders competition by providing a barrier to new entrants or insurers wanting to increase market share. The commissions are passed on premium costs and offer no value to the motorist. Motorists will not be disadvantaged by the removal of choice at point of sale as they will be able to nominate an alternative insurer within the first three months of the new policy, with that nomination taking effect at the fourth month of the policy.

One element of the CTP scheme established by the former government was to allow CTP insurers to compete for customers through offering value-added goods and services. This bill therefore enables approved insurers to offer direct policy holder benefits (inducements) as approved by the minister. However, these inducements cannot be a charge against the CTP business. In other words, if an insurer offers some form of inducement, like a multipolicy discount, the associated costs will not be borne by all South Australian motorists through their CTP premiums.

The minister will approve the types of inducements to be offered by the insurer to ensure they benefit motorists. This will give the market flexibility and promote innovation, rather than prescribing all types of allowed inducements in law. Common inducements offered in other jurisdictions include at-fault driver protection policy, multipolicy discount, rewards program membership or a gift card. This change aligns South Australia to the other privately underwritten schemes in New South Wales, Queensland and the ACT. I seek leave to insert the detailed explanation of clauses into Hansard without my reading them.

Leave granted.

EXPLANATION OF CLAUSES

Part 1—Preliminary

1—Short title

2—Commencement

3—Amendment provisions

These clauses are formal.

Part 2—Amendment of Motor Vehicles Act 1959

4—Amendment of section 8—The register

This clause amends section 8 to enable the Registrar of Motor Vehicles to make corrections and alterations to the register of motor vehicles if satisfied that the register is incorrect, incomplete or inaccurate.

5—Amendment of section 99—Interpretation

This clause amends section 99 to remove the definition of transitional period which will become redundant on 1 July 2019.

6—Amendment of section 99A—Insurance premium to be paid on applications for registration

This clause amends section 99A to allow an applicant for the registration of a motor vehicle (other than a new motor vehicle) or for the renewal of registration of any motor vehicle to select an approved insurer for the motor vehicle. The approved insurer for a new motor vehicle will continue to be selected by the CTP Regulator in accordance with a scheme determined by the Minister. The amendments also provide for the CTP Regulator to choose the approved insurer for a motor vehicle if the applicant fails to make a selection.

If a new motor vehicle is registered for a period of more than 3 months, the registered owner of the vehicle may, within the first 3 months of the registration, nominate an approved insurer other than the approved insurer selected by the CTP Regulator. If this happens and the policy of insurance is transferred, the insurer selected by the CTP Regulator (the old insurer) must pay to the insurer nominated by the registered owner (the new insurer) the same proportion of the insurance premium received by the old insurer for the policy of insurance as the unexpired portion of the period for which the policy remains in force bears to the whole of the period for which the policy of insurance is effective under the Act.

For the purposes of section 99A, a motor vehicle is a new motor vehicle if it has not previously been registered anywhere in Australia and less than 2 years have elapsed since the year and month in which it was manufactured.

7—Amendment of section 101—Approved insurers

This clause amends section 101 to remove provisions that will become redundant on 1 July 2019.

8—Substitution of section 129A

This clause substitutes section 129A.

129A—Commissions and other financial benefits and inducements prohibited without Minister's approval

The proposed new section 129A prohibits approved insurers from giving or offering to give anyone commissions, discounts, gifts, rebates or any other form of financial benefit or inducement in respect of policies of insurance unless the benefits or inducements are of a class approved by the Minister from time to time.

Debate adjourned on motion of Hon. I.K. Hunter.