Law reforms brought in by the NSW Government in 1999 are allowing further cuts to be made to compulsory party insurance (CTP) in the state, but a plaintiff law lobby group remains critical of the insurance industry.

The Motor Accidents Authority’s (MAA) annual report tabled in Parliament last week shows average premiums have fallen from $441 to $322 – the lowest figure since 1995. It also shows insurers wrote $5.38 billion of CTP business between 2000 and 2003.

The MAA says insurers are projecting profits of 19-25%, or $1.14 billion, on this income, and the frequency of claims may drop further from an estimate of 46 per 10,000 vehicles to 32. There have also been fewer accidents due to road safety campaigns and dry weather.

Richard Royle, President of the plaintiff lobby group Australian Lawyers Alliance, says the people paying the price for this are the victims of road accidents who are not receiving just compensation for their injuries.

“These figures show insurers will make more than half a billion dollars over four years in excess of what the MAA thinks is reasonable,” he said. “Excessive profits have been made at the expense of the genuinely injured, and it’s time for the Government to rectify the injustice.”

But Insurance Council of Australia Deputy CEO Dallas Booth says the MAA figures have confirmed that NSW insurers are maintaining lower prices and that since the reforms insurers have been directing their efforts, and premium funds, towards people with the most severe injuries.

He warned against drawing conclusions from claims paid for the long-tail classes of business such as CTP, where it may take some years to finalise a claim.

“For example, the MAA report states that to date CTP insurers have finalised only 66% of claims that arose out of injuries in 2000, the first year of the new scheme,” he said. “It will still take a number of years for the more serious (and hence more expensive) claims to be finalised.”