The SA Government will establish an industry regulator to ensure premiums remain reasonable when it privatises the compulsory third party (CTP) motor market.

Treasurer Tom Koutsantonis last week told Parliament private insurers can offer CTP cover from July 1 next year, confirming a budget announcement last year.

“Market sounding exercises to further inform interested insurers will begin soon, followed by expression of interest and request for tender processes,” he said.

A set number of eligible insurers will be permitted to offer cover for three years, before the market opens fully.

Premiums will be fixed for three years, except for increases related to the consumer price index, and will then be set by the market.

Allianz is the first insurer to signal a move into SA. MD Niran Peiris says introducing competition to the state’s motor accident scheme is a significant reform.

“The SA Government is to be congratulated for having the foresight and reform commitment to allow private insurers to bring innovation and competition to the underwriting of CTP, which will benefit motorists and injured persons,” he said.

The Government commissioned PricewaterhouseCoopers to advise on the move, and says the Department of Planning, Transport and Infrastructure will continue to issue renewal notices as part of the vehicle registration process.

Mr Koutsantonis says payment methods will remain the same.