Pensioners Compulsory Third Party Insurance Premiums

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SpeakersWest The Hon Ian; Della Bosca The Hon John
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Page: 12196

    The Hon. I. W. WEST: My question is directed to the Special Minister of State. Will the Minister advise the House of recent changes to the pensioner category for green slips?

    The Hon. J. J. DELLA BOSCA: Under the motor accidents scheme pensioners, both aged and others, have in the past been eligible for a 10 per cent discount on the base premium for sedans. However, the cost of claims for this group has increased dramatically over the last few years. The Motor Accidents Authority [MAA] advises that the increase has primarily been attributed to the deteriorating claims experienced by the non-aged component of the pensioner group. As a result, insurers began imposing a loading on non-aged pensioners, resulting in these people paying a loading on their premiums of up to 25 per cent. That meant that non-aged pensioners were in fact paying more in their premiums than were drivers of the same age who were not pensioners.

    This is not an acceptable situation to the Government. The pensioner class has therefore been replaced with a seniors class for all people aged over 55. It provides a 25 per cent discount for all drivers 55 years and over. Non-aged pensioners will now have their premiums assessed on the same basis as the non-pensioner population. It should also be noted that the principal cause of major variations in green slip premiums is changes to discounts and loading structures imposed by insurers. In applying a discount or loading, insurers can have regard to such risk factors as the age of the driver or owner of the vehicle, age of the vehicle, comprehensive insurance history and at-fault claims history. Clearly, such risk variations are entirely valid.

    However, the MAA has advised me that it is concerned that there have been many changes by some insurers in changing from discount to loadings which may not be justified on the basis of changed risk. Therefore, I have directed the MAA to undertake a review of the bonus-malus, or, in simple terms, discount-loading arrangements, by insurers to ensure that those arrangements properly reflect risk rating. In addition, the MAA is to consider any recommendations for changes to the bonus-malus arrangements and their future application.

    The Hon. M. J. Gallacher: They were not aware of it. The honourable member for Gosford was.

    The Hon. J. J. DELLA BOSCA: I have been following what the honourable member for Gosford has been up to. That is very interesting.

    The Hon. M. J. Gallacher: He raised this issue.

    The Hon. J. J. DELLA BOSCA: He has been raising his profile.

    The Hon. M. J. Gallacher: He raised this issue.

    The Hon. J. J. DELLA BOSCA: Yes, very effectively.

    The Hon. M. J. Gallacher: That is how you found out about it.

    The Hon. J. J. DELLA BOSCA: Yes.

    The Hon. M. J. Gallacher: You agree that he raised the issue?

    The Hon. J. J. DELLA BOSCA: I have learned a lot from him. His latest exercise was reported on the front page of the Express Advocate.

    The Hon. M. J. Gallacher: Do not believe everything you read. The fact of the matter is he raised this issue.

    The Hon. J. J. DELLA BOSCA: Were you the highly placed source? There are only two highly placed sources in the Liberal Party on the Central Coast—it must be you. Given the important role played by insurers in advising consumers of the nature and quality of the product they are purchasing, the MAA has also been asked to look at the obligation on insurers to give proper, informed notification of changes to the bonus-malus application to vehicle owners. So that vehicle owners are not confused by the changes in compulsory third party [CTP] rates, insurers may need to advise vehicle owners of the risk factor which has resulted in the change in premium.

    The CTP scheme is a privately underwritten insurance scheme with the premium price set by insurers subject to limited review by the MAA. However, green slip prices must clearly reflect the risk and when there are changes those changes must be explained to the consumer. The MAA will examine current premium setting arrangements to ensure that those principles are properly and fully applied. I have asked the MAA to report to me by the end of June and will further advise Parliament when that report is available.

    I also remind motorists, and by extension members of the House, that they should not simply accept the renewal quote that they receive from their insurer. By shopping around motorists can get the best premium for their vehicle. For example, one motorist who was sent a renewal by an insurer for $396, excluding GST, was able to get a better premium from a different insurer. After shopping around the motorist was able to get a green slip for $284.50, excluding GST—the same price as the previous year. The Government's reforms to the motor accidents scheme are clearly working.