Compulsory Third Party Insurance Reform: ACT Confirmed, On-Hold In NSW Photo:
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Trevor Collett | Jul, 10 2013 | 8 Comments

Both the Australian Capital Territory and New South Wales have committed to reforming their respective Compulsory Third Party (CTP) insurance schemes.

Drivers in both jurisdictions currently pay well above the national average.

While reforms have come into effect in the ACT, the NSW government has put its reform agenda on-hold due to public fears of sky-rocketing CTP premiums and concerns of reduced compensation for victims.

Acting Finance Minister Andrew Constance conceded in June that the Government there does not have the numbers in the Legislative Council to proceed with the legislation.

He has committed to more consultation and "more work to discuss the reform". The bill is now expected to be debated in the Upper House in August.


Third party insurance is payable as part of vehicle registration. It is compulsory, it attaches to all cars, and, across most states, is a 'no fault' scheme.

It does not protect a driver from liability for property damage, but insures all drivers - even those at fault - against liability for injury, disability and even death caused as a result of a motor vehicle accident for which the driver of the vehicle is at fault.

(NSW has a 'fault-based' compulsory scheme; ie. identify the guilty party and prosecute - it is a lawyer's picnic, often with lengthy disputes over who is at fault.)

In no state in Australia can you register a vehicle without CTP. It covers not only driver and passengers of all vehicles involved in an accident, but also extends to pedestrians and cyclists.

But it is not consistent across all states in Australia, neither is the cost of CTP consistent from jurisdiction to jurisdiction.

What does it mean for you? TMR compared some registration and CTP premiums around Australia and has summarised the current situations in both NSW and the ACT below.



For Motor vehicle registration in Australia, fees and charges vary across each state jurisdiction, as do the CTP premiums.

TMR used the example of a 2013 Holden Commodore VF V6 sedan to compare registration fees and CTP premiums in Victoria, NSW, the ACT, Queensland and Western Australia.

In some states, CTP premiums and registration fees can vary according to the vehicle type, a driver’s age and gender, vehicle age, engine, driving history, loyalty to an insurance company and even postcode.

This isn’t the case in WA and the ACT, where drivers are charged a flat rate for CTP premiums and a weight-based sliding scale for registration.

The process is even simpler in Victoria, with all 'cars' under 4.5 tonnes attracting the same registration fee (for private registration). There is however, a variation in CTP premiums based on postcode.

Queensland has an open market on CTP providers like NSW (and now the ACT) but each insurer in Queensland offered identical quotes during our research.

The sunshine state was unique (for our chosen 'sample car') as the only state to charge more for the same car with a larger engine. A lot more, as it turns out; our VF Commodore example attracted a penalty of $177.50 for buyers who choose the V8 option.

Annually, that’s $88.75 in extra registration charges per cylinder.

In summary, state by state, using our sample 2013 VF Commodore sedan:


West Australia’s weight-based scheme has the best deal for our VF Commodore V6, with a combined fee of $573 regardless of where the car is garaged, of which $260 is the CTP premium.


Victoria’s flat-fee scheme for light vehicles was next least expensive, with $698 required to register the Commodore in inner Melbourne falling significantly to $593 for those living in a randomly chosen rural area.

This saving is due to a $327 CTP premium for cars garaged in rural areas compared to $422 for inner Melbourne.


Our 2013 Commodore VF sedan copped a combined registration and CTP charge of $824 under Queensland’s cylinder-based registration scheme, rising to an astonishing $1002 for the same car with a V8 engine. The CTP premium for both however was $332.


We would need to write an epic tome to fully explain the current CTP insurance scheme in NSW, but it can be summed up in one word: expensive.

The registration fee itself is also expensive, with a whopping $470 required to register a V6 Commodore before adding the cost of CTP insurance.

Worse, in NSW, CTP premiums vary wildly between insurers.

We used the example of a male in his 30s, perfect driving record with a comprehensively insured car living in inner Sydney, Wollongong and the NSW far-south coast.

From a low of $386 for CTP insurance on the far-south coast, this figure can hit $558 for drivers living in Sydney. It varied from $427-471 in Wollongong and was as cheap as $505 for inner Sydney.

However, if our 2013 VF Commodore V6 were to suddenly age to become a 2008 VE Commodore V6, add up to $100 to those CTP insurance premiums.

Add registration and CTP together - it's compulsory after all - and drivers in NSW can pay from $856 (which is still more than WA, Queensland or Victoria) to register the VF Commodore, all the way up to an eye-watering $1028. Make that $1126 for the 2008 VE Commodore.


The ACT ranked worst, asking for a shameful $1027 to register the VF Commodore for 12 months, of which a sizeable $579 chunk is the CTP premium.

The CTP component alone is more than WA’s entire registration charge and only $14 less than what some rural Victorians are paying in combined charges.

Australia’s average weekly wage is $1081, according to the latest Australian Bureau of Statistics figures.

ACT residents have the nation’s fattest pay packets, averaging $1384 a week. But that, of course, perhaps does not explain why the ACT has the nation’s highest vehicle registration charges…

ACT residents could not influence registration fees in any way before July 1; but even now, there are no guaranteed savings yet under the new scheme.

In states where there is a choice of insurer providing compulsory third cover, TMR advises that you conduct your own research when it's time to renew - and, although the liability cover is gazetted, CTP charges can vary greatly.

Can ACT and NSW residents ever expect to see a fairer system? Read on:


ACT: New Insurers Soon

The ACT has operated under a sole CTP insurance provider since 1979, with a “one-price-fits-all” scheme. All vehicles currently registered in the ACT were previously automatically insured for CTP by the NRMA.

But, under the reforms as of July 1, drivers in the ACT now have three new CTP providers joining the NRMA, giving them a choice for the first time.

AAMI, GIO and Apia (Australian Pensioners Insurance Agency) were all granted licences to offer CTP insurance to ACT motorists, with the NRMA also set to continue as a CTP insurance provider.

ACT residents may consider that it's about time: the ACT government promised CTP insurance reform years ago, and has been widely accused of dragging its feet.

It is hoped that introducing competition into the ACT CTP insurance market will now put downward pressure on CTP premiums.

"This is great news for Canberra motorists," ACT Treasurer Andrew Barr said when unveiling the package.

"Competition in our CTP market will bring the obvious benefit of choice and it also offers greater opportunities for innovative insurance products, more investment and employment in the ACT.”

ACT motorists will be eagerly awaiting their registration renewals now that July 1 has passed to see what affect the new CTP insurance providers will have on premiums.


NSW: CTP Reform Announced

In NSW, where CTP premiums have risen up to 70 percent in the last five years, the government would also like reform its CTP insurance scheme, largely in an effort to drive costs down, and thus drive premiums down.

However, as NSW already has an open market for CTP insurance, the savings for motorists may have to come from elsewhere.

In NSW, high legal costs and a level of uncertainty and dispute involved with CTP insurance claims have been blamed for spiralling premiums.

However, the insurers themselves aren’t as pure as the driven snow on this, with a reported combined profit last year of $300million on CTP insurance policies.

NSW is thus looking to adopt a “no fault” scheme – similar to Victoria’s TAC system – in order to narrow the opportunity for lawyers to dispute claims in court.

The proposed new scheme is planned to also feature additional cost-saving measures for insurers such as capped compensation levels along with set values for certain injuries.

By taking some of the opportunity for dispute, legal wrangling and guess-work out of CTP claims, the government also hopes victims will receive compensation sooner.

In early May, embattled NSW Minister for Finance and Services Greg Pearce announced the proposed changes, claiming that CTP premiums could fall by up to 15 percent.

“We want a green slip system (CTP) that’s more affordable for motorists and fairer for people injured in motor vehicle accidents,” Mr Pearce said.

“At the moment the scheme is nothing more than a lawyers’ picnic, with accident victims getting less than half of all premiums collected by insurers.”

“The CTP changes will drive down costs by making sure the system focuses on injured people - not lawyers.”



Oddly, it’s that last line that may have caught the attention of the Motorcycle Council of NSW (MCCofNSW).

The council says that by the NSW government’s own admissions, motorcycle claims will rise by up to 1000 per year as the new scheme will recognise riders involved in single-vehicle collisions for the first time.

As the average cost of rehabilitating an injured rider in NSW is currently around $221,000 (compared to $78,700 for an injured car occupant) that equates to an extra $221 million in compensation that CTP insurance providers will have to fork out each year.

The MCCofNSW claims that insurers will look to recover this cost, resulting in a hit on motorcycle CTP premiums of up to $2000 per motorcycle; if it were averaged out among all registered motorcycles.

On a different matter, the council has also expressed concern with the 'no fault' scheme, claiming that it could rob injured motorists of the opportunity to seek legal redress in court.



The MCCofNSW are not the only ones to express concern, with cross-bench senators blocking the legislation in the NSW Upper House.

As a result, the NSW government was forced to put the legislation on hold until after the winter parliamentary recess.

Acting NSW Minister for Finance and Services Andrew Constance announced that the government will use the break to address concerns with the new CTP insurance legislation shown by cross-bench senators by “holding a round-table discussion with relevant stakeholders and community representatives to consult further on the Bill”.

“An enormous amount of work has been done over the past 12 months to review the current CTP scheme, however I am conscious that people do not have the full information before them and I want to take action to address this where possible,” Mr Constance said.

“Many in the community are paying more than $500 a year for their CTP insurance, yet in other states they can pay up to hundreds of dollars less.”

Mr Constance also met with leading figures in the motorcycle community who had argued for more time to assess the proposed changes.

“It was clear that they wanted more time to assess the bill and what it means for NSW motorcyclists. They indicated that other community groups were also keen for more time to assess the bill.” Mr Constance said.

Assuming all parties reach an agreement, the CTP insurance reforms are likely to be debated in late August when the NSW parliament resumes.

TMR will be watching with interest.

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