The NSW Government has released a discussion paper confirming what most of us already knew – the system of Compulsory Third party Insurance (“Greenslips”) paid for by motorists costs too much.
Figures released by the Government show that only 45 cents of every Greenslip dollar goes
to the injured road user; 34 cents is eaten up in insurer’s expenses and profits; and 18 cents goes towards legal and investigative expenses.
One thing that the Government, insurance industry and lawyers don’t disagree on is that the current CTP scheme is broken, because less than half of every premium dollar actually goes to injured road users.
According to Victor Dominello, Minister for Better Regulation and Innovation, NSW needs a fairer and more affordable system. The Minister said that insurer profits are unacceptably high and result in motorists paying higher Greenslip premiums.
Meanwhile, there is still significant disagreement with the Government, insurers and lawyers as to how the scheme could be made fairer and more cost efficient.
The Government is hoping to engineer reforms such that there will be a no-fault scheme introduced to fund benefits for low-severity injuries while retaining the right to sue for the most seriously injured.
Lawyers remain suspicious that any reduction in premiums will be at the expense of injured people (who would lose their common law rights to sue insurance companies and ultimately receive less money).
Insurers are seeking adequate returns in a sustainable way.
Whichever way you look at it, something has to give. Otherwise, average CTP premiums will continue to climb beyond what are already unaffordable levels.
John Clarke is the Solicitor Director of Clarke Law with a local network of offices in Narooma, Bermagui.