The new financial year marks the start of regulatory changes that will free ACT households from insurance stamp duties and improve compulsory third party (CTP) cover in WA and SA.

On Friday July 1 the ACT became the first state or territory to stop applying insurance duties, completing a five-year transition from a 10% charge to zero.

Insurance Council of Australia (ICA) CEO Rob Whelan says the average combined home building, contents and motor insurance premium would be $185 higher were it not for the removal of duties.

“Policyholders in every other jurisdiction pay an additional 9-11% stamp duty on top of their base insurance premiums, as well as GST. Those combined taxes raise total premiums by about 20%.”

ICA says other states and territories should follow the ACT’s lead, which is supported by recommendations in reports such as the Productivity Commission inquiry into natural disaster funding arrangements and the Henry tax review in 2010. .

“Modelling by Deloitte Access Economics last year calculated state and territory governments could reap an extra $575 million over five years by replacing insurance stamp duties with a commensurate rise in more efficient taxes,” Mr Whelan said. “This would be achieved by higher economic growth.”

In WA an expanded CTP scheme will provide lifetime care and support for all motorists catastrophically injured in crashes. Treasurer Mike Nahan says the expanded cover will cost a maximum of $99 in the first year for each vehicle and motorcycle, with smaller increases for tractors, mopeds, vintage cars and farm firefighting vehicles.

“This scheme will change the lives of the estimated 44 people in WA each year who are catastrophically injured in car crashes in which they were either at fault or unable to identify another driver at fault, and their loved ones,” he said.

The Insurance Commission of WA will administer the expanded insurance cover.

In SA a three-year transition has begun towards a fully competitive underwritten CTP scheme.

ICA says from last Friday all SA motorists will have their CTP personal injury insurance policies transferred to one of four general insurance companies now underwriting the scheme.

Road users will not see a difference in the scheme’s operation during the transition, while premiums are regulated to insure they rise only in line with inflation.

Once the market becomes fully competitive from July 1 2019, motorists will start to reap the benefits of competition on price and service, Mr Whelan says.