The NSW State Insurance Regulatory Authority (SIRA) says it will recover $91 million in excess profit from compulsory third party (CTP) insurers.
The state government’s 2017 CTP reforms gave SIRA powers to control the level of insurer profits under the transitional excess profits and losses (TEPL) mechanism.
CEO Adam Dent says he will activate the mechanism to recover “excess insurer profit” following a “rigorous assessment”.
“Over the last six months SIRA worked with insurers to assess the profitability of providing CTP insurance in NSW,” Mr Dent said.
“To bring savings back to the customer, SIRA decided to recover insurer profit above 10%.
“I have informed insurers of my decision to claw back almost $91 million, which means that in 2022 NSW motorists will enjoy an average saving of $19 on their Green Slip.”
The TEPL mechanism provides insurers with a 28-day cooling off period to appeal the decision. The cooling off period expires on November 29.
“To date insurers have not indicated an intention to appeal the decision,” Mr Dent said.
“A key feature of the 2017 reforms was introducing the power to recover profit, so insurers were aware of this possibility when they signed up to offer CTP insurance in the new scheme.
“With any new scheme, as claims experience develops, there will be greater certainty of costs and insurers will price premiums accordingly.”
The claw-back relates to profit on claims lodged in the first accident year of the new scheme – from 1 December 2017 to 31 December 2018.
SIRA will undertake a further assessment of insurer profits next year.
source:insurancenews.com.au
