Queensland’s Motor Accident Insurance Commission (MAIC) has released a discussion paper seeking feedback on ways to improve the maintenance of the state’s compulsory third party (CTP) motor insurance scheme.
The paper’s release comes after Treasurer and Minister for Trade and Investment Cameron Dick asked the MAIC – which oversees the scheme – to review the programme.
The MAIC said the last review took place in 2016 and it was appropriate to take another look at the scheme to ensure it continued to work for Queenslanders.
It says the review will not take into account any changes to the CTP scheme’s premium setting process or compensation benefits for injured people.
“Thus, this review focuses on identifying opportunities to maintain and improve Queensland’s position as the most affordable CTP scheme on the mainland by considering questions on the performance aspects of scheme that could be improved”, says the discussion paper.
“MAIC last reviewed the scheme in 2016 and the actions taken as a result of the 2016 scheme review have helped keep the cost of CTP insurance affordable for the average motorist.
“However, the lack of competition between insurers in setting premiums (a key objective of the scheme) remains an ongoing challenge.”
The discussion paper says that the continued lack of price competition between the scheme’s four licensed insurer participants – Suncorp, Allianz, QBE and RACQ – indicates that the main objective underlying the private underwritten model is likely which cannot be carried out.
“In this context, there is merit in exploring whether changes to the scheme’s design can produce outcomes more consistent with the scheme’s objectives,” the paper says.
The paper flags three scenarios for consideration by key stakeholders and the wider community.
The first scenario recommends maintaining the status quo; the second scenario suggests keeping the current private underwritten model with changes to the scheme design; and in the third scenario move to a public underwriting model.
RACQ welcomed the review and said it recommended premium parity to the State Government.
“All we ask is that for every dollar of CTP risk we hold in the scheme, we receive the same level of premium, and if an insurer has less risk, they receive less premium. That’s fair,” said CEO David Carter.
“A change like this will not affect motorists or how much you pay for CTP, nor will it affect any other professionals, including legal and health practitioners, who work on the scheme.”
According to the discussion paper, changes under the second scenario would include the introduction of a premium equalization mechanism.
The paper argues that a premium equalization mechanism could encourage continued participation by existing insurers and attract new insurers to enter the Queensland CTP scheme.
The Australian Lawyers Alliance also welcomed the review but said it could not comment specifically on the premium equalization proposal.
“The premium equalization proposal, and any other potential options, need to be carefully considered by the government to ensure that our CTP scheme remains strong, works for the benefit of injured people and competition is strengthened,” said the group’s Queensland President Sarah Grace.
“We expect that during the review process there will be calls from some insurers to make fundamental changes to our procedure, by removing the rights of injured motorists.
“We have seen calls for rights to be removed in the past, driven only by insurers looking to increase their profitability. Queenslanders take the protection of their legal rights seriously and are willing to fight to protect those rights.”
The closing date for submissions is April 21.
Click here to access the discussion paper.
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