Fundamental legislative changes to CTP Green Slip Scheme
In May 2009 the NSW State Government introduced several amendments to the Motor Accidents Compensation Act 1999 and Motor Accidents (Lifetime Care and Support) Act 2006. Some amendments to the Motor Accidents Compensation Act 1999 had a fundamental impact on the operation of the old CTP greenslip scheme in NSW.
The amendments expanded the cost base of the scheme and provided additional benefits for at-fault drivers.
Basis of the old CTP scheme
Before looking at the amendments and the consequence of those amendments, it is necessary to look at some of the principles on which the scheme was based.
The CTP greenslip scheme in NSW was (and is) made up of two separate schemes:
- The Third Party Insurance Scheme, regulated by the Motor Accidents Compensation Act 1999. Under the Third Party Insurance Scheme, compensation was available where people are killed or injured as a result of an accident caused by the driver of a motor vehicle. The scheme was fault based, except for children less than 16 years of age and for people killed or injured in a blameless accident. Before the 2009 amendments, the Third Party Insurance Scheme specifically excluded the at-fault driver and the driver in a blameless accident.
- The Lifetime Care and Support Scheme, regulated by the Motor Accidents (Lifetime Care and Support) Act 2006.The Lifetime Care and Support Scheme was introduced in October 2006. The scheme provided benefits for people catastrophically injured in a motor vehicle accident, regardless of fault. The at-fault driver is included in the Lifetime Care and Support Scheme.
In summary, before the May 2009 amendments, the at-fault driver in a motor vehicle accident was not covered by the CTP greenslip scheme unless the driver was catastrophically injured (in which case the Lifetime Care and Support Scheme applied). If the at-fault driver was not catastrophically injured, the cost of treatment was met by the public hospital system or private health insurance.
How CTP claims were lodged
People injured in a motor vehicle accident and entitled to claim under the Third Party Insurance Scheme could lodge a formal claim, or they could lodge an Accident Notification Form (ANF). The ANF was introduced to provide for faster payment of small claims.
An ANF had to be lodged within 10 days of an accident. After lodgement of an ANF an injured person could be entitled to claim up to $5,000 for treatment expenses and lost earnings incurred within 6 months of an accident.
If an injured person lodged a formal claim, it had to be lodged within 6 months of an accident. A formal claim could be lodged where the claim would exceed $5,000, and could include compensation which could not be claimed through an ANF.
A formal claim could include hospital, medical and pharmaceutical expenses, rehabilitation expenses, attendant care services, respite care services, home modification, loss of earnings (past and future) and compensation for pain and suffering and loss of quality of life.
2008 CTP Scheme reforms
The Government signalled its intention to reform the scheme 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 Mini Budget Paper (page A-7) showed that, by introducing the reforms, the Government estimated cost savings of $105 million between 2009 and 2012.
The intention of the Government was to transfer the cost of treating at-fault drivers from the public hospital system to the CTP greenslip scheme.
There were two major reforms to the operation of the CTP greenslip scheme as a consequence of the amendments to the legislation.
- For accidents occurring from 1 July 2009, the bulk billing arrangements under section 54 of the Act had been expanded to include the cost of treatment for at-fault drivers, so that hospital treatment, transport by ambulance and other treatments for at-fault drivers was funded by the CTP greenslip scheme.
- For accidents occurring from 1 April 2010, the right to claim using an Accident Notification Form under Part 3.2 of the Act had been expanded to include at-fault drivers. Subject to the provisions, at-fault drivers would be entitled to claim up to $5,000 for treatment expenses and for lost earnings by lodging an ANF. Also from that date, no person would be entitled to claim by lodging an ANF if their injury was the result of a serious offence committed by them.
In summary, for accidents which occurred from 1 July 2009, the cost of treating at-fault drivers in the public hospital system was funded by the CTP greenslip scheme. This was instead of being a cost on the public hospital system or on private health insurance. For accidents occurring from 1 April 2010, at-fault drivers would be entitled to claim up to $5,000 through an ANF.
At-fault driver benefits
However, the amendments did not extend to at-fault drivers the full benefits available to other people injured in a motor vehicle accident. For example, at-fault drivers would not be entitled to claim for:
- Medical, pharmaceutical and rehabilitation expenses incurred outside a public hospital and which exceeded the $5,000 ANF limit
- Attendant care services or respite care services
- Home modification
- Compensation for pain and suffering and loss of quality of life
- Past loss of earnings exceeding the $5,000 ANF limit
- Future loss of earnings.
Effectively, the CTP greenslip scheme was no longer fault-based in respect of hospital treatment, transport by ambulance and from 1 April 2010, claims through an ANF. It remained fault-based in respect of other claims such as those listed above.
Cost of amendments to the scheme
The precise cost of the amendments to the CTP greenslip scheme was not clear.
In November 2008 the Government estimated the amendments would save $105 million over 3 years between 2009 and 2012. The Motor Accident Authority estimated an additional 4,000 at-fault drivers per year would now claim up to $5,000 through an ANF (Motor Accidents Authority of NSW, Annual Report 2008-2009, page 12).
Regardless of the actual cost, the amendments increased the cost base of the NSW CTP greenslip scheme and resulted in increased premiums.
Insurers are required to lodge submissions to State Insurance Regulatory Authority (SIRA) 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 were reflected in greenslip prices then being paid.
In response to specific enquiries made by us, the then MAA advised “the combined impact of the bulk billing and no-fault ANF reforms is approximately $10 per Green Slip”.
Amendments to the scheme also had an impact on At-Fault Driver Cover, an additional feature then offered by three of the insurers. Policy documents setting out the terms on which At-Fault Driver Cover was offered stated that no at-fault driver benefit was payable under those policies if a benefit was also paid or payable under the CTP greenslip scheme.
From 1 April 2010, benefits under the At-Fault Driver Cover policies may not have been payable where an at-fault driver lodged a claim through an ANF, unless the insurers revised the policy terms before that date.
We analyse any currently available At-Fault Driver Cover.