Compulsory third party (CTP) premiums in the ACT will jump 10% on September 1.

The premium was unchanged in the territory’s budget earlier this year, but CTP fees were recently the subject of arbitration between monopoly insurer NRMA Insurance and the ACT Government.

NRMA Insurance spokesman James Rickards told insuranceNEWS.com.au the increase is due to rising CTP claims costs in the territory.

“Under CTP schemes, claims are paid using the combination of premiums and the returns generated by the investment of these premiums,” he said.

“Recent difficult economic conditions have resulted in lower investment returns. As such, premiums need to increase to support the CTP scheme.”

Mr Rickards says the ACT has “extensive benefits” available under common law compared to other state CTP schemes and the ACT’s CTP premiums must be priced accordingly to support the scheme.

The ACT’s CTP regulator has also justified the increase, saying it follows an extensive actuarial review process and “a relatively short process of arbitration”.

“The increase was a mixture of the difficult state of the yield curve and increases in the cost of the scheme,” Treasury Director of Legal and Insurance Policy Tom McDonald told insuranceNEWS.com.au.

The last increase was on August 16 last year, when CTP increased by 8%.

The new premium for a family car will rise $52.10 to $578.70.