The cost of compulsory third party (CTP) vehicle insurance in the ACT has nudged downward slightly as insurers adjust prices ahead of the roll-out of the government's new no-fault scheme.
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The new scheme's legislation passed through the ACT Assembly in May and is due to come into effect from February 1 next year but insurers are already tweaking premiums ahead of the new scheme's introduction.
Across the four major insurers, the most saved on a premium for a private motorist with no input tax credits is $43.90.
Originally premiums for the scheme were modelled at $385 and $465 - a saving of between $91 and $171 on 2017 levels.
CTP offers protection against potentially crippling financial liability in the case a third party involved in a motor accident is killed or seriously injured. This includes passengers, other drivers and their passengers, cyclists and pedestrians.
Under the changes, anyone hurt on Canberra's roads will be able to receive treatment, care and lost income benefits for up to five years whether or not they were at fault, with those who are more seriously injured able to sue for a capped level of compensation through the common law system.
The new system was initially expected to provide significant savings for consumers of between $91 to $171.
However, a series of legislative amendments to the scheme by the ACT Greens produced a recalculation which gradually eroded the potential savings.
Insurers calculate their premiums independently of government, factoring in the estimated claims cost for the year, the estimated number of claims, and their own costs to administer the policies.
Compulsory Third Party insurance costs have long been a thorny issue in the ACT, with NRMA Insurance holding a defacto market monopoly for over 30 years and little incentive offered to competitors to enter the market.
While that situation has now changed and competition emerged, the government's new scheme has faced vigorous opposition from the legal profession, which believes the change puts more power into the hands of the insurers, rather than the courts, in deciding an equitable outcome for claimants.
For the purposes of CTP calculation, vehicles in the ACT are separated into classes, such as private vehicles, goods vehicles, tractors, historic vehicles and even light rail vehicles.
Under this so-called "community-rated" scheme, all motorists in each class pay the same CTP fee regardless of their individual risk profile, but with adjustments according to private or business use.
While under the new scheme private motorists will save between $14 and $43.90 depending on their insurer, owners in other classes, such as motorcycles over 600cc, will save little or nothing.