Suncorp is confident it can continue to make money from compulsory third party (CTP) motor cover in Queensland following a reduction in premiums.

Queensland motorists have been handed a $24 reduction on their premiums largely as a result of a decision in last week’s state budget to axe commissions on the product.

Private insurers supply CTP to the Queensland market and until now have paid a commission to car dealers for arranging the product.

The ban on CTP commissions has angered car dealers who will lose their cut earned through arranging the cover.

Motor Trades Association of Queensland Principal Policy Director Richard Payne described the move as “another slap in the face for the motoring industry”.

Major provider Suncorp was last week seeking further detail from the Queensland Government and regulators on the decision. The insurer maintains it will continue to profitably manage its CTP portfolio despite the reduction in premiums.

“Suncorp’s multi-brand approach means we are well positioned to respond to initiatives that increase consumer choice when it comes to choosing or renewing with a CTP insurer,” the company said in a statement.

Mr Payne told insuranceNEWS.com.au his association has received many calls from dealers “who are very unhappy. Dealers are entitled to a small margin for processing cover on behalf of the Government.”

He says the decision to remove commissions is a “smokescreen” to mask CTP premium hikes over the past two years.

However, car dealers will maintain their existing commission arrangements on other products such as comprehensive insurance, with Suncorp and Allianz Australia the dominant providers.

Motoring association RACQ says CTP premiums increased between 17-22% last year.

Government authorities are currently reviewing the competitive structure of the local CTP regime.