About CTP

Act now—our CTP scheme is under threat

On 20 September 2018, the Legislative Assembly referred the Barr Government’s proposed new compulsory third party insurance (CTP) scheme, the Motor Accident Injuries Bill 2018, to the Standing Committee on Justice and Community Safety Committee for review.

Submissions are due on 12 October, and the Committee is to report back to the Assembly on 1 November 2018.

This means Canberrans have only a few weeks to have their say on this important piece of legislation.

Road users, including not only motor vehicle drivers and passengers, but also bicycle riders, motor cycle riders and pedestrians, should be deeply concerned about the changes being proposed.

The impacts of the proposed new scheme include:

  • About 90% of Canberra road users injured through no fault of their own will lose their right to fair compensation;
  • The current fair level of compensation provided to innocent road accident victims will be traded away to pay benefits to the driver who caused the accident;
  • Injured people without the assistance of specialist advice will be expected to settle disputes about their medical treatment and their capacity to work directly with well-resourced insurers;
  • Insurance companies will have an expanded role in determining when and if compensation to injured people is paid;
  • The scheme does not compel insurers to guarantee early treatment and care for injured people; and
  • Insurance companies will have far greater control over when and how much they pay out to accident victims, and they will be able to make even larger profits.

The ACT scheme is one of the fairest and most stable CTP schemes in the country. It is vital that the community send a strong message to the Barr Government that they do not want their rights to be eroded so shamefully.

We urge all Canberrans to participate in the committee process. Send your views on the Barr Government’s proposed changes to the Standing Committee on Justice and Community Safety Committee. Email the committee at lacommitteejcs@parliament.act.gov.au

Background

The ACT’s existing CTP insurance scheme is one of the most effective in the country. It offers Canberrans injured in car accidents caused by others access to full compensation. It is also financially stable, unlike many other jurisdictions.

In March 2018, as part of the pilot citizens’ jury process, 39 unaccountable people with little or no experience of what it is to be injured in a car accident in the ACT, ‘voted’ to dismantle the ACT’s existing CTP insurance scheme. The Barr Government is now seeking to implement this new scheme.

We are dismayed at the scheme changes proposed by the pilot citizens’ jury, and fearful for the negative impact it will have on injured people in the future if enacted.

The jury has advocated for universal coverage – that is, extending CTP insurance coverage beyond those injured through the negligence of others to include those who caused the accident in the first place. Few would disagree with universal coverage, but real issues of fairness arise when the compensation payable to those injured by others is arbitrarily cut to pay for the benefits to be extended to the at-fault drivers.

The introduction of legislated thresholds will allow some injured people to access compensation on the basis that the government considers them sufficiently injured. Other seriously injured people will be deemed as not sufficiently injured, and so will receive limited compensation.

The imposition of these thresholds will prevent about 90% of people injured through the negligence of others from pursuing a common law claim to compensate them fully for their injuries. Instead, those injured people, now considered ‘not seriously injured’, will have to rely on ‘defined’ (limited) treatment, care and income replacement benefits which will be available for a specified period of time.

The jury was clearly attracted to claims of early treatment for injured people, and no-one would argue against the benefit of this. It is unfortunate that the model lacks any measures to achieve this objective. Sadly, apart from hopeful words of encouragement, there is nothing in the design of the proposed model that will compel insurers to approve treatment plans and pay or reimburse medical costs quickly and efficiently. In the absence of such measures, it is hard to see how the current delays and cumbersome processes that prevent early treatment will not continue.

What is Compulsory Third Party (CTP) Insurance?

CTP insurance is a compulsory form of insurance that all registered motor vehicle owners are required to purchase, generally at the same time they renew their motor vehicle registration.

CTP insurance ensures that people injured in a car accident through the negligence of others are properly compensated.

Unlike other Australian States and Territories, CTP premiums in the ACT are not differentiated on the basis of risk factors such as geographic location, age, driving record or claims history.

In the ACT, the premium for a class 1 passenger vehicle is the same, regardless of those factors.

Premiums are set by the insurers who then must submit those premiums to the CTP Regulator for approval. The CTP Regulator may reject premiums if they do not fully fund an insurer’s liabilities, if they are excessive or if they do not comply with guidelines issued by the CTP Regulator.

The operation of the scheme and the responsibilities and functions of the CTP Regulator in the ACT are currently set out in the Road Transport (Third-Party Insurance) Act 2008 and the Road Transport (Third-Party Insurance) Regulation 2008.

What does CTP insurance cover?

All drivers in the ACT pay CTP insurance as part of their vehicle registration fee. The insurance provides compensation for people injured or killed due to the negligence of another.

This insurance coverage extends to all innocent road accident victims, including pedestrians, cyclists, motor bike riders, passengers and other drivers.

The ACT currently has a fair system of compensation. Injured people are eligible for compensation for their expenses and losses, including loss of income, medical expenses, domestic care and assistance and damages for pain and suffering.

Why do we need CTP insurance?

Motor vehicles accidents can happen to anyone.  The most recent ACT Government report, the 2016 ACT Road Crash Report, outlines the number and severity of motor vehicle accidents in the ACT.

Importantly, the report notes that in 2016:

  • there were over 7,900 vehicle accidents recorded, involving 15,476 vehicles and resulting in 11 fatalities and 110 hospital admissions;
  • the most frequent cause of vehicle accidents were rear end collisions. Approximately 45% of all motor vehicle accidents were the result of rear end collisions;
  • there is an upward trend in the number of vulnerable road users (cyclists, pedestrians and motor-cyclists) injured on our roads; and
  • collisions with animals (including wildlife) accounted for only four injury crashes.

This data highlights the importance of having an accessible and fair CTP scheme in the ACT.  It is crucial that all road users are able to claim fair compensation under the ACT CTP insurance scheme when they have been injured in an at-fault motor vehicle accident.

Other forms of vehicle insurance

CTP insurance can be distinguished from other forms of optional motor vehicle insurance, including:

  • Personal Injury/Accident Insurance;
  • Third Party Property Insurance; and
  • Comprehensive Insurance.

Personal Injury/Accident Insurance covers a road user for any personal injuries they have experienced as a result of driving negligently themselves or in circumstances where they cannot prove that another party drove negligently.

Third Party Property Insurance insures a negligent driver for the property damage (i.e. to another motor vehicle) that they have caused in an accident.

Comprehensive Insurance enables a registered motor vehicle owner to recover compensation for damage to their own vehicle and it also covers damage caused to other motor vehicles when they are at fault in an accident.

What the ACT Government is not telling you

  • The ACT Government says… ‘Right now our CTP scheme does not cover everyone injured in a motor vehicle accident’.

    In fact… CTP insurance is intended to compensate those people injured in a motor vehicle accident in the ACT through no fault of their own. The underlying rationale for CTP insurance is (to the extent possible) make good an injury caused by the fault of another.

    Learn more

  • The ACT Government says… ‘Some other states, like NSW, also have common law schemes but they are different from the ACT scheme because they define or have limits on the benefits that are payable for different types of injury, which can make premiums cheaper. The reason ACT residents pay different premiums from other jurisdictions is largely because of the benefits structure, and court-based model of resolving claims.’

    The reality is… A range of factors influence the premium levels.

    Learn more

  • The ACT Government says… ‘The single largest component of CTP premium dollars payments is paid for non-economic loss, commonly known as ‘pain and suffering’ damages. These payments don’t cover bills, but rather provide compensation for intangible losses like the experience of pain over time, or lost enjoyment of a person’s time.’

    The fact of the matter is… the point of CTP insurance is to attempt to return the innocent injured victim to the same position they were in before they were injured through the fault of another. This includes compensating the injured party for their pain and suffering.

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  • The ACT Government says… ‘The ACT’s scheme relies on negotiation between insurers and injured parties. If an agreement cannot be reached, it is often necessary to go to court to have the claim resolved. A full payout of benefits is not made until a claim is finalised. On average, large claims take around 48 months and small claims take 18 months to finalise.’

    In fact… all insurers require injury or damage to be clearly demonstrated before they will pay out on any insurance policy.

    Learn more

  • The ACT Government says… ‘A no-fault scheme provides some benefits regardless of who was at fault for the accident, without the need to sue and go to court.’

    The fact is… legal practitioners have no in principle objection to the extension of the scheme to include at-fault drivers, but we do strongly oppose achieving this extended coverage at the expense of innocent motor vehicle accident victims.

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  • The ACT Government says… ‘In 2016-17, 27 per cent of finalised scheme payments went to treatment and care costs, with almost the same share going to legal and investigation costs. In 2014?15 and 2015-16, legal and investigation costs for finalised claims amounted to more than treatment and care costs.’

    In fact …. many of the costs categorised as legal costs are not legal fees, but appear to have been included in the legal costs category to bolster the Government’s argument about excessive legal costs.

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