NSW’s State Insurance Regulatory Authority has reached the second stage in its annual assessment of compulsory third party (CTP) insurer profit. 

The review has resulted in insurer profit clawbacks in the previous two years of $91 million and $178 million. 

NSW drivers will know by the end of the year if they will pocket savings on compulsory Green Slips which cover the treatment and care of people injured in motor car accidents. 

After concluding the preliminary review of profit at an industry level, actuaries are now reviewing the profit earned by individual CTP insurers on the sale of Green Slips, SIRA says. 

Under the 2017 transitional excess profit and losses (TEPL) mechanism, SIRA has the power to control the level of profits insurers make on the sale of Green Slips. 

The clawback represents pure profit taken by insurers, above a 10% profit margin, after injured road users receive the treatment and care they need. 

SIRA used the mechanism for the first time in 2021 to take back almost $91 million in insurer profits. Last year, SIRA activated the mechanism to claw back almost $178 million in insurer profits. 

The profits are redistributed to motorists through discounts on Green Slips. A Green Slip is required to register a motor vehicle in NSW. 

“The current assessment is reviewing whether insurers earned excess profit or experienced excess losses on the 2018, 2019, 2020 and 2021 accident years,” SIRA said. 

“The assessment must also determine that there is sufficient certainty of insurer’s future claims costs for profit to be recouped.” 

SIRA says insurers can apply to retain up to 3% of profit each accident period to invest in innovations to improve outcomes for injured road users or road safety for motorists. 

“To date, SIRA has granted preliminary approval for eight applications,” SIRA said. 

“To receive final approval and to retain a share of profit, insurers must have evidence that the innovation has delivered measurable benefits.”