A NSW parliamentary committee says motor insurers are charging appropriate premiums for compulsory third party (CTP) cover, dismissing arguments that they have made unduly high profits.

The Standing Committee on Law and Justice handed down its findings last week. Its investigation into the Motor Accidents Scheme highlighted a continued drop in premiums over the 2004/05 financial year. It found premiums dropped in dollar terms and as a percentage of average weekly incomes.

However, insurers also managed to increase their profits, thanks to an unexpected fall in claims frequency leading to a substantial reduction in costs. The committee found there was no evidence to suggest insurers had unfairly profited from the fall in claims.

Insurance Council of Australia CEO Kerrie Kelly says the scheme is operating as it was intended to, and took a swipe at the state’s legal establishment, which she says has exaggerated the issue of insurance profits.

She called on the NSW Bar Association to cease its “misinformation campaign. It is a campaign which has nothing to do with the CTP scheme but everything to do with the legal fraternity wanting to increase their incomes.”