Commencing in December 2017, the NSW Government will introduce reforms to the CTP (Compulsory Third Party) Green Slip scheme, to provide better support for people injured on NSW roads and reduce Green Slip costs for vehicle owners.[i]
Why the changes?
The NSW Government determined that the old system had systemic issues that needed addressing:
- An injured person might wait 3-5 years before receiving compensation for lack of income
- Only 45 cents out of each CTP dollar collected by insurers (excluding Lifetime Care and Support Levy and GST) was going to injured people in the form of benefits – the remainder was swallowed up by legal costs, insurer profit and scheme costs
- NSW has some of the highest premiums in the country and without some form of reform, prices would keep rising
- Fraudulent claims were estimated to be adding up to $75 to the cost of each Green Slip.[ii]
How much money will I save?
A handy table will give you an idea of how much you’re likely to save when the new scheme comes into effect on December 1, 2017, based on your vehicle type. Under the current scheme, the average vehicle is paying $652. With the new scheme, this average drops to $528 for an overall savings of $124.[iii]
Because discounts are prohibited by law for CTP insurance, a pensioner’s discount is not available with these new reforms.
Will I receive a refund?
From January 2018, refunds will be offered to those who are eligible. This is for those who buy or renew a Green Slip before 1 December and will therefore be paying pre-reform prices.
Refunds are calculated on a pro-rata basis and apply to vehicle owners as at midnight, 30 November. This means that the closer to 1 December that you purchase your policy, the greater your refund amount will be. All car owners who are refund-eligible will be notified. While there is so far no exact timeframe for these notifications, they are most likely to occur between late December (2017) and early January (2018). You can find more information about Green Slip refunds here.
Because current legislative changes increase the benefits paid to injured motorcycle riders, motorcycle owners won’t receive a refund with these reforms. Motorcycle riders are deemed to be at fault in 90% of accidents in which they’re involved. Before these new reforms were introduced, they received little benefits. Now, they will receive medical costs and weekly income payments, regardless of fault, for up to 6 months – and longer if not at fault and with more serious injuries.
Refunds are calculated by determining the annual premium reduction for each vehicle class and garaging location based on legislative changes. This reduction is then applied to individual policies on a pro rata basis that depends on the number of days left on the policy as at 1 December 2017.
Because customers don’t always renew their policy with the same insurer, the NSW government decided it was better to refund customers directly rather than reducing future premiums. The NSW government also applies a minimum threshold for situations where the refund amount is too small to cover the administration costs associated with providing the refund.
Will the claims process be quicker?
Yes – one of the main aims of the reform is to pay benefits to injured people sooner and streamline the entire claims process, with more than 27% of claims paid in the first year after an accident (compared to the 6% paid in that time under the current scheme).
The current claims process is lengthy and complicated. The same process applies whether a person has a minor, moderate or serious injury. The reforms will streamline the claims process and pay benefits to injured people sooner.
The reforms mark a cultural shift away from an adversarial system (where lawyers and insurers argue the level of compensation awarded) to an environment where insurers are bound by law to provide benefits to the injured. This will result in a substantial improvement for those injured on NSW roads, with benefits to start being paid soon after a claim is made. It also means that people with minor injuries will no longer have to endure a long, complicated common law claims process.[iv]
But how do these reforms actually decrease prices?
Under the new scheme, the provision of benefits for minor injuries will be set by law, instead of based on lump sum compensation payments. This will provide better support for injured people when they need it. An injured person (regardless of fault), will receive up to 6 months of benefits that include medical and treatment expenses, weekly income payments (if recovery time off work is required) and commercial attendant care for help needed around the home.
The new scheme will reduce the proliferation of legally represented soft tissue injuries and reduce the amount of time it takes to resolve claims, freeing up time and funds previously used for things like medical investigations and legal and insurer costs. Further information on price reduction under the new plan can be found here.[v]
How will benefits to injured people change?
One of the principal goals of these new reforms is to provide benefits and support to people earlier and more efficiently, regardless of who is at fault in an accident.
For example, someone assessed with 10% or less ‘whole person impairment’ (moderate injuries) can initially receive up to 2 years of weekly benefits, and up to 3 years if they make a common law claim. If they still need ongoing support for earnings loss as they approach the end of 2 years, they can make a claim for past and future economic loss.
What happens with the MCIS Levy?
The Medical Care and Injury Services Levy (MCIS), which was introduced in 2006 in conjunction with the Lifetime Care and Support Scheme, will still apply with the new reforms. These will continue to cover lifetime medical care costs for those who suffer severe injuries due to motor vehicle accidents. From 1 December 2017, the MCIS levies will be shown on your green slip as the ‘Fund Levy’. Previously charged as a percentage of the insurer’s premium, it will now be a flat dollar amount based on garaging location and vehicle type, and set by the State Insurance Regulatory Authority.
Are these new reforms related in any way to the Emergency Services Levy?
No, the ESL does not apply to CTP insurance. Fire service levy charges will still continue to be included with the premiums for other insurance products, however.
How can I learn more about these new reforms to the NSW Green Slip scheme?
The NSW Government, working with the State Insurance Regulatory Authority, has a comprehensive information page dedicated to helping vehicle owners understand the new changes to the administration of the Green Slip scheme. Here, you can find out how the scheme will reduce fraud, create more help and support and result in more CTP dollars going to the injured people who need it most. There’s also information on how the changes affect motorcycle riders, ride sharing and taxis.
- New reforms to the NSW Green Slip scheme for CTP will commence on 1 December, 2017.
- The idea behind the changes is to provide quicker and more efficient claims support to people injured on NSW roads.
- Changes to the scheme will result in reduced prices for the average car owner of $124.
- Some car owners may receive refunds.
- Claims processes will be streamlined under the new system.
- These reforms have provided new benefits to injured people.