Greenslips News

New Greenslip Price Classifications for Motorbikes Commencing 1 July 2010 - Winners & Losers

Classification of motorbikes for determining CTP greenslip prices in NSW is changing from 1 July 2010.  The new classifications will result in significant greenslip price changes for many owners, some up and some down.

For greenslip purposes, motorbikes are classified on the basis of engine capacity.  The classifications are designated by the Motor Accident Authority of NSW for use by greenslip insurers.  Greenslip insurers apply those classifications, along with consideration of other factors such as location, claims history, driving record and rider age, to determine greenslip prices.

Until 30 June 2010 three classifications apply:

i) Under 100cc
ii) 101cc to 300cc
iii) Over 300cc

From 1 July 2010, five new classifications will apply:

i) Under 225cc
ii) 226cc to 725cc
iii) 726cc to 1,125cc
iv) 1,126cc to 1,325cc
v) Over 1,325cc

The change in classifications is designed to allow more levels of price differentiation for risk based on engine capacity and claims experience.  Clearly, one classification for all motorbikes above 300cc is too wide.

The new classifications do not include consideration of other risk characteristics such as the type of motorbike or pillion capacity.

The new classifications result in a major realignment of prices.  Some motorbike owners will benefit from sizeable decreases in greenslip prices, whilst others will be required to pay significantly more.

We have surveyed prices as at 30 June 2010 and 1 July 2010 for a range of motorbikes in the Sydney Metropolitan and Country areas.  The results, showing the average change in price between those two dates are set out in the table below.

Hardest hit will be motorbikes at the bottom of the 226cc to 725cc classification, such as 250cc motorbikes.  250cc motorbikes were previously classified with 101cc to 300cc motorbikes.  For a 250cc motorbike the survey shows an average increase in price of 88.9% in the Sydney Metropolitan area and 107.3% in Country areas.

The survey shows that prices have increased in the three classifications for motorbikes above 726cc.  The average increase in price for an 800cc motorbike is 5.2% in the Sydney Metropolitan area and 1.9% in Country areas.  The average increase in price for a 2,000cc motorbike is 19.8% in the Sydney Metropolitan area and 13.0% in Country areas.

Motorbikes in the 1,126cc to 1,325cc classification have shown a higher average increase in price than other large capacity motorbikes.  For a 1,200cc motorbike the survey shows an average increase in price of 34.9% in the Sydney Metropolitan area and 24.6% in Country areas.

The biggest winners are motorbikes in the upper range of the 226cc to 725cc classification, such as 400cc and 650cc motorbikes.  Those motorbikes were previously classified with all motorbikes over 300cc.  For both 400cc and 650cc motorbikes the survey shows an average decrease in price of 27.3% in the Sydney Metropolitan area and 29.6% in Country areas.

Some small capacity motorbikes under 225cc will also benefit.  For a 125cc motorbike (such as a scooter) the survey shows an average decrease in price of 9.9% in the Sydney Metropolitan area and 3.9% in Country areas.

Interestingly, the survey also shows that for an older rider with good claims and driving records, the benefit of shopping around to compare prices will in some cases save several hundred dollars, whereas for a young rider with bad claims and driving records, the benefit of shopping around will generally be less than $20.00.

The trends shown in the table are based on a sample of greenslip prices as at 30 June 2010 and 1 July 2010.  Greenslip prices change over time and in every case need to be checked on the basis of specific motorbike and owner details.

Comment at our Blog.  Tell us how the chages will affect you.  What is your opinion on the new classifications?

At-Fault Driver Cover Benefits No Longer Payable - Conflict Between Scheme Reforms & Insurer Policy Documents

The second of two major reforms to the CTP greenslip scheme became effective today.  That reform conflicts with the terms under which some insurers have offered special benefits to injured at fault drivers, with the consequence that those benefits are no longer payable.

For accidents occurring from today, the CTP greenslip scheme has been expanded to provide that at fault drivers will also be entitled to compensation through lodgement of an Accident Notification Form (ANF).  Subject to the provisions, at fault drivers will be entitled to claim up to $5,000.00 for treatment expenses and for lost earnings by lodging an ANF.  The NSW Government expects that this will result in an extra 4,000 claims per year.

The first reform, which became effective in July 2009, means that the cost of hospital treatment, transport by ambulance and other treatments for at fault drivers is funded by the CTP greenslip scheme.

Prior to the reforms, the at fault driver in a motor vehicle accident was not covered by the CTP greenslip scheme, unless the driver was catastrophically injured.

Full analysis of the scheme reforms is available on this site.

Five of the seven greenslip insurers currently offer at fault driver cover benefits whereby they pay specified benefits for specified injuries which the driver at fault may sustain in a motor vehicle accident.  Those benefits are in addition to the statutory requirements.  Analysis of the benefits on an insurer by insurer basis is available on this site.   The benefits range from $10,000 to $300,000.

In our analysis of at fault driver cover and in our News article of 10 March 2010, we highlighted a conflict between the reform commencing today and the policy terms used by insurers in the at fault driver cover policy documents currently in place.

The conflict arises because the policy terms of the five insurers specifically exclude payment of a benefit under the at fault driver cover policy if the injured at fault driver is also entitled to or receives compensation under the CTP greenslip scheme.

Given the reforms to the CTP greenslip scheme, at fault drivers are entitled to compensation under the scheme.  Until insurers alter the wording of their at fault driver cover policy documents, no benefit will be payable under those policies because the at fault driver is entitled to or has received compensation under the expanded CTP greenslip scheme.  As at midday today, no insurer had revised it’s published at fault driver cover policy documents.

We will monitor and report on the position.

NSW Government Press Release on CTP Green Slip Scheme Reform, Commencing 1 April 2010

In our news article of 10 March 2010 we released news of the reforms to the CTP greenslip scheme.

The first reform provides that hospital treatment, transport by ambulance and other treatments for at fault drivers is funded by the CTP greenslip scheme.  The second reform, effective for accidents occurring from 1 April 2010, provides that at fault drivers will also be entitled to compensation through lodgement of an Accident Notification Form (ANF).  Subject to the provisions, at fault drivers will become entitled to claim up to $5,000.00 for treatment expenses and for lost earnings by lodging an ANF.

The NSW Government has today issued a Press Release announcing the second reform.  A copy of that Press Release is available.

Interestingly, the Press Release does not deal with the issue we raised in our news article.  That is, the impact on At Fault Driver Cover Policies offered as an additional benefit by some of the insurers.  There has been no change to this point.  We will monitor the position.

Detailed analysis of the legislation changes and the impact on the CTP greenslip scheme is available on this site.

CTP Greenslip Scheme Reforms - Second Reform Commences 1 April 2010

Reforms to the CTP greenslip scheme by the NSW State Government are having a fundamental impact on the operation of the scheme.  The second of two major reforms commences on 1 April 2010.

The reforms impose new costs on the CTP greenslip scheme, provide additional benefits for at fault drivers and result in higher greenslip prices.

The Government first signalled its intention in the November 2008 State Mini Budget when it announced "The Government will further reform the Greenslip scheme to provide hospital and ambulance coverage for at-fault drivers".

The reforms go beyond the intention stated in the November 2008 State Mini Budget.

Prior to the reforms, the at fault driver in a motor vehicle accident was not covered by the CTP greenslip scheme, unless the driver was catastrophically injured.

To implement the reforms the government introduced new legislation in May 2009.

There are two major reforms to the operation of the CTP greenslip scheme as a consequence of that legislation.

1. The first reform is already effective and applies to accidents occurring from 1 July 2009, so that hospital treatment, transport by ambulance and other treatments for at fault drivers is funded by the CTP greenslip scheme.

2. The second reform, effective for accidents occurring from 1 April 2010, provides that at fault drivers will also be entitled to compensation through lodgement of an Accident Notification Form (ANF).  Subject to the provisions, at fault drivers will become entitled to claim up to $5,000.00 for treatment expenses and for lost earnings by lodging an ANF.

In summary, from 1 July 2009, the cost of treating at fault drivers in the public hospital system is funded by the CTP greenslip scheme, rather than being a cost on the public hospital system or on private health insurance and from 1 April 2010 at fault drivers will be entitled to claim up to $5,000.00 through an ANF for treatment expenses and for lost earnings.

The Government has reduced costs on the public hospital system by transferring the cost of treating at fault drivers to the CTP greenslip scheme.

The precise cost of the reforms to the CTP greenslip scheme is not clear.

The November 2008 State Mini Budget Paper (page A - 7) shows that by introducing the reforms, the Government estimated cost savings of $105,000,000.00 between 2009 and 2012.  The Motor Accident Authority has estimated that an additional 4,000 at fault drivers per year will now claim up to $5,000.00 through an ANF (Motor Accidents Authority of NSW, Annual Report 2008-2009, page 12).

Regardless of the actual cost, the reforms have increased the cost base of the NSW CTP greenslip scheme and have resulted in increased greenslip prices.

Insurers are required to lodge submissions to the Motor Accident Authority (MAA) at least once a year, setting out the greenslip prices they propose to charge.  The submissions lodged in October 2009 incorporated the impact of both reforms.  The reforms are reflected in greenslip prices currently being paid.  In response to specific enquiries made by us, the MAA has advised that “the combined impact of the bulk billing and no-fault ANF reforms is approximately $10 per Green Slip”.

Interestingly, the government has extended the scheme to include at fault drivers…up to a point.  People injured in a motor vehicle accident, other than the at fault driver, are entitled to benefits under the CTP greenslip scheme in excess of those available to an at fault driver, despite the changes to the legislation.

A final unknown, but not insignificant, consequence of the reforms is the impact on at fault driver cover.  At fault driver cover is an additional feature offered by five of the seven greenslip insurers.  Through at fault driver cover insurers pay specified benefits for specified injuries which the driver at fault may sustain in a motor vehicle accident.  As at 8 March 2010 the at fault driver cover policy documents published by the insurers state that no at fault driver cover benefit will be payable where compensation is also paid or payable under the CTP greenslip scheme.  Unless the insurers change the terms of their at fault driver cover policies, from 1 April 2010 any at fault driver lodging an ANF for compensation will not be entitled to payment under the insurers at fault driver cover policy.

Detailed analysis of the legislation changes and the impact on the CTP greenslip scheme is available on this site.