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Premiums, Profitability and Claims to 2010

A NSW Upper House Committee is currently enquiring into the injury insurance scheme, profitability and claims, and the role of The Motor Accident Authority in NSW.

As a result of the enquiry, there has been press about the difference between profits the insurers are estimating for the purpose of setting premiums and profits the insurers are actually making.  There has also been a focus on the number of claims.

Premiums, profitability and claims

Information on Premiums, Profitability and Claims to 2010 is set out below.

 Average Premium – June Quarter
Sydney Metro Passenger Vehicles
All NSW Vehicles
  % Change
   % Change
2003 $339.99 $328.00
2004
$343.00  1.2% $332.00 1.2%
2005
$324.00  -5.5% $320.00 -3.6%
2006
$314.00  -3.1% $309.00 -3.4%
2007
$322.00  2.5% $318.00 2.9%
2008
$329.00  2.2% $324.00 1.9%
2009 $389.00  18.2% $372.00 14.8%
2010 $428.00  10.0% $404.00 8.6%
 
2003/2010 26.3% 23.2%

Premiums listed in the table exclude GST.
Premiums are from MAA Annual Reports, Scheme Performance Reports.

Profit margins and profit and loss

Weighted Average Profit Margin in Insurer Filings Year Ending 30 June
Average Estimate of Discounted Profit and Loss as % of Premium Year Ending 30 September
2000 7.7% 30.0%
2001
7.9% 28.7%
2002
8.2% 31.0%
2003
8.2% 24.3%
2004
8.5% 27.0%
2005
8.7% 21.3%
2006
8.7% 18.0%
2007 6.0% 12.3%
2008 7.7% 5.0%
2009 8.1% -1.3%
 
Average 8.0% 19.6%

Weighted Average Profit Margins are from MAA Annual Reports, Scheme Performance Reports for 2004-2005 & 2009-2010.  2010 data for Estimate of Discounted Profit and Loss is not reported.

Average Estimates of discounted Profit & Loss are from MAA Annual Report, Scheme Performance Report for 2009-2010.

Number of claims

Estimated Ultimate Number of Claims Year Ending 30 September
2000 16,844
2001
15,502
2002
14,055
2003
12,885
2004
12,290
2005
11,757
2006
11,167
2007 10,729
2008 10,220
2009 11,732
 
Average 12,718

Estimated Ultimate Number of Claims are from MAA Annual Reports, Scheme Performance Reports for 2004-2005 & 2009-2010.  Reported 2010 data is not for a full year and is therefore not included

Review of NSW Registration Label Requirements

The NSW Government has approved a review of registration label requirements in NSW for light vehicles (with a GVM up to 4.5 tonnes).

The review, which is being undertaken by the Better Regulation Office and the Roads and Traffic Authority (RTA), will examine the ongoing need for registration labels and will provide recommendations for reform.

An Issues Paper was made available.

Submissions to the review are required by 7 October 2011 and a final report and recommendations are expected to be presented to the NSW Government by the end of 2011.

Facts from Issues Paper

Some interesting facts from the Issues Paper:

  • In the 2010/11 financial year, approximately 6.1 million vehicles were recorded by the RTA as registered in NSW. 97% of those vehicles are light vehicles with a GVM up to 4.5 tonnes, the subject of the review.
  • Registration label for light vehicles abolished in Western Australia from 1 January 2010 and in South Australia from 1 July 2011.
  • 13,000 registration label offence penalty notices were issued in NSW in the 2010/11 financial year, according to the State Debt Recovery Office. The penalty notice fine amount is currently $88.00 for a light vehicle.
  • Approximately 46% of NSW registration renewals are processed online or by phone, according to the RTA. That figure is expected to grow to 50% by 2015.
  • There are currently 77 automatic number plate recognition cameras used by NSW Police which can detect if a vehicle is unregistered.
  • Since August 2010, vehicles caught committing an offence by an RTA enforcement camera, such as a speed or red light camera, are also checked for valid registration and CTP greenslip.

Benefits

The main benefits identified in the Issues Paper are:

  • Cost (of producing labels)
  • Convenience (having to replace labels)
  • Environment (printing and disposal of waste)

Risks

The main risks identified in the Issues Paper are:

  • Effectiveness of law enforcement
  • Increase in the number of vehicle operators failing to renew registration and ctp greenslips.

RTA Abolished – Transport for NSW Created

The Roads and Traffic Authority (RTA) and three other state government bodies are to be abolished and a new authority, Transport for NSW is to be created.

In a press release issued on Friday, 15 July 2011, Duncan Gay (Minister for Roads and Minister for Ports) along with Gladys Berejiklian (Minister for Transport) announced that the RTA, NSW Maritime, the Transport Construction Authority and the Country Rail Infrastructure Authority will be abolished and their functions transferred into Transport for NSW, the new authority.

Transport for NSW

The press release says that “Transport for NSW will be responsible for the co-ordinated delivery of transport services across all modes, and a renewed focus on the customer”.

Transport for NSW will be responsible for operations, procurement, planning and policy for all modes of transport in NSW.

The new authority will be made up of six divisions, Customer Experience, Planning & Programs, Transport Services, Transport Projects, Freight and Regional Development plus Policy and Regulation.

The government is trying to create a more co-ordinated and efficient structure for planning and delivery of all modes of transport in NSW.

Responsibility for road construction and maintenance, oversight of harbours and waterways, licence tests, licences and registration for both land based vehicles and marine craft will come under another new body called NSW Roads and Maritime Services. NSW Roads and Maritime Services will be an operating entity providing services to and under the control of Transport for NSW.

The Motor Accidents Authority will not be affected by the new structure.

Demerit Points – Scheme Changes January 2011

There have been changes to the demerit point threshold for unrestricted drivers and demerit points have been reduced or removed for some offences.

13 Demerit points

From 31 January 2011, if you are an unrestricted licence holder, you can accumulate 13 demerit points before you lose your licence.  Prior to that date the threshold was 12 points.  The threshold for professional drivers has increased to 14 points.  Professional drivers are those who drive for a living, such as taxi drivers and truck drivers.

For offences occurring on or after 31 December 2010, points for 22 offences have been reduced or removed.

More information and a list of the offences for which demerit points have been reduced or removed is available on this site.

Representation for Motorbike Riders

In a December 2010 Media Release, Minister for Finance Michael Daly announced several initiatives affecting motorbike riders.

New appointments

Firstly was the appointment of Rob Colligan to the Motor Accidents Advisory Council.  As Chairman of the Motorcycle Council of NSW, Mr Colligan has been appointed to represent the views of motorbike riders.  The Motor Accidents Advisory Council is an advisory group appointed by the minister to provide advice and recommendations to the Motor Accidents Authority.

Secondly, the Minister confirmed the appointment of Ernst & Young to undertake an independent actuarial review of motorbike greenslip pricing.  We will monitor the outcome of the review.

The Minister advised that a member of the Motorcycle Council will also be appointed to the working group considering the feasibility and options to adopt testing procedures and ratings for motorbike clothing.

Finally, the Minister announced that the MAA is funding production of rider safety videos to be produced by the Motorcycle Council.

A copy of the Media Release is available on this site.