SIRA claws back $183 million of CTP insurers’ profit
The NSW State Insurance Regulatory Authority has clawed back $183.1 million in excess profit from compulsory third party (CTP) insurers following an annual assessment.
Under a mechanism introduced in 2017, the authority can take back insurer profit above 10% after setting aside funds required for injured road users to receive treatment and income support.
CEO Adam Dent says the $183.1 million will be injected into the Motor Accidents Operational Fund, allowing a continuation of pricing benefits resulting from a previous clawback.
“Greenslip prices in 2023 are on average $29 lower because of the excess insurer profits SIRA clawed back in the last assessment cycle, and this discount will be maintained over 2024 as a result of the clawback in this cycle,” he said.
The regulator activated the transitional excess profits and losses mechanism for the first time in 2021, taking back almost $91 million in profits. In 2022 it activated for almost $178 million.
It says the need to claw back profit should ease as insurers begin to understand the claims experience emerging under the 2017 motor accidents scheme and adjust CTP prices accordingly.
Guidance used when adjusting CTP premiums is based on forward assumptions informed by prior experience, while the excess profits and losses mechanism is a hindsight correction using actual experience.