News that RACQ’s profits have jumped from $26.7 million in 2017 to $64.4 million for 2018 is solid proof that Queensland’s CTP scheme does not need any change.
Last year the insurance industry, with RACQ to the fore, ran a campaign blaming lawyers for a spike in Queensland Compulsory Third Party insurance claims.
The RACQ profit result shows the organisation is clearly making a tidy income from its services, which include significant CTP insurance premiums.
At 30 June 2018, RACQ held 17.55 per cent of the Queensland CTP market with annual income from CTP premiums alone totalling around $186.22 million (including GST). Hopefully, this result will stop RACQ demanding changes to our CTP scheme which we have long argued is a strong and viable scheme.
Insurers have wanted to scrap the state’s fault-based CTP payouts scheme and replace it with so-called ‘guaranteed defined benefits’ – in other words, caps on payouts for injured claimants, which have proved disastrous for claimants in other states such as NSW.
However, despite recent, unfounded media reports claiming Queensland’s CTP scheme is arguably the worst in the country, the latest report for FYE 2018 from the Motor Accident Insurance Commission, which runs the Queensland CTP scheme, says otherwise.
Insurance Commissioner Neil Singleton says Queensland road users continue to enjoy a strong and sustainable CTP insurance scheme.
“In terms of key scheme metrics, CTP insurance premiums remained stable, the incidence of claims fraud identified by insurers remained very low and market research surveys showed that motorists and claimants are satisfied with the scheme – overall, it is a positive story”, he reported.
This shows the scheme is in good financial health with Queensland again having almost the cheapest CTP insurance (which forms a large portion of Queensland vehicle registration fees) in the country – but, as in the past, Queensland CTP insurers are using media pressure to white ant the scheme.
The insurers – once again – brand the legal profession as the greedy villains in this exercise to generate fear and loathing and bring pressure on the state government to change our CTP scheme. The simple fact is that our scheme is in very good financial health, and those injured claimants who are legally represented recover far more than those who choose to pursue a claim on their own.
It’s ironic because the CTP insurers conveniently disregard the independent review of the Queensland compulsory third-party insurance scheme delivered to the Motor Accident Insurance Commission in December 2016, which expressed concerns over the high level of profits consistently being made by the Queensland CTP insurers.
While Queensland CTP insurers have every right to make a profit, they should not be allowed to continue profiteering from the scheme while simultaneously calling for measures such as guaranteed defined benefits to further increase their profits and decrease damages paid to injured claimants.
The practice of interstate ‘claims farmers’ preying on Queenslanders also remains a contentious issue.
It’s believed that interstate law firms convincing motorists involved in minor bingles to chase payouts through the courts are behind a surge in CTP claims for minor injuries. Interstate law firms are not bound by the caps on the sums Queensland lawyers can charge for fees to pursue such smaller claims.
Queensland firms cannot, by law, charge more than 50 per cent of a net settlement for their total fees which makes it uneconomic to pursue small claims through the courts. Interstate law firms are not subject to Queensland’s fees cap.
We believe ‘claims farmers’, including some loss adjusters (who are engaged by insurers), are selling information about small claims to interstate law firms which then encourage people involved in accidents to bring CTP claims.
So interstate lawyers are pursuing insurers, Queensland CTP insurers are still making significant profits and Queensland lawyers are unfairly copping the flak.
The insurance industry is happy to take Queenslanders’ CTP premiums but fights claims and makes people jump through hoops for motor vehicle injury claims. Insurance companies do not roll over with injury claims. Everything is a fight with them. RACQ’s CTP market share, premiums and profit result shows why they have this attitude.
Trent Johnson is a compensation law specialist and a director with Brisbane firm Bennett & Philp Lawyers.