Primary factors used by insurers
Greenslip prices are determined by insurers and regulated by the State Insurance Regulatory Authority (SIRA).
Insurers use different factors and apply different weightings to those factors to determine the premiums they will charge.
Primary factors used by the insurers and which affect greenslip prices are:
- Geographic region
- Type of vehicle
- Age of vehicle
- Distance travelled
- Vehicle performance
- Age of vehicle owner
- Age and gender of youngest driver
- Driving history:
- Number of traffic offences
- Number of demerit points
- Number of years licensed
- Claims history:
- Level of insurance and no claim bonus
- Number of at-fault claims.
Geographic or rating regions and vehicle classifications are designated by SIRA.
There are five geographic or rating regions:
- Sydney Metropolitan
- Outer Metropolitan
- Newcastle/Central Coast
Insurers are not allowed to differentiate on the basis of locality within a designated rating region.
Greenslip prices do vary.
Insurers submit premiums to SIRA
SIRA issues Premiums Determination Guidelines as a mechanism to regulate the setting of greenslip prices. SIRA also regulates distribution and marketing of greenslips through the Market Practice Guidelines. Both documents are contained within Motor Accident Guidelines 2017 and available on the SIRA site.
Insurers are required to submit premium filings to SIRA, setting out proposed premiums and additional information in support of those premiums. SIRA may reject a filing of proposed greenslip premiums if it considers the premiums will not fully fund the insurers liability, if it considers the premiums to be excessive, or if the premiums do not conform with its Premiums Determination Guidelines.
Section 2.19(3) of Motor Accident Injuries Act 2017 says:
“The Motor Accident Guidelines may only specify maximum rates of assumptions used in the determination of premiums if the Authority is satisfied that they are reasonable and will result in insurers having sufficient premium income to meet their liabilities in relation to third-party policies and to make a reasonable profit”.
Insurers are required to submit premium filings to SIRA at least once a year. Insurers may also notify SIRA that they wish to vary premiums at other times during the year by submitting a non-compulsory filing.
The issue for SIRA is to ensure the scheme is competitive and greenslips are affordable. The scheme will be competitive only if a sufficient number of insurers are motivated to participate. Insurers will only participate if there is sufficient profit.
SIRA operates a price comparison service, Green Slip Check.