The Australian Lawyers Alliance (ALA) says the Queensland compulsory third party (CTP) motor insurance scheme does not require “fundamental changes” amid concerns over the future participation of RACQ Insurance. 

ALA made the comments after RACQ – one of four participating insurers – raised the possibility that it may be forced to leave the scheme because of ongoing losses from its CTP portfolio. 

“We consider the current architecture of the scheme to be solid, affordable and fair,” ALA Queensland State President Sarah Grace said. 

“Insurers have left the scheme in the past and we are confident that, if RACQ does withdraw, all the necessary stakeholders would work collaboratively to ensure that no motorist is left without insurance in Queensland.” 

The Motor Accident Insurance Commission (MAIC) – which oversees the scheme – is currently reviewing the CTP program. Consultation on the review closed on April 21. 

RACQ in its submission says in 2021/22 the portfolio made a $35.6 million loss after reinsurance and the outlook for this year is also unfavourable. 

“These losses persist in FY2022/23 and RACQ’s ongoing participation in the scheme is at risk,” RACQ says. 

RACQ says “premium equalisation” should be introduced so that “fairness” is restored but QBE and Suncorp – two of the four insurers in the Queensland CTP scheme – are against the measure. 

MAIC has flagged three scenarios for discussion. The first calls for keeping the status quo; the second suggests keeping the existing privately underwritten model with scheme design changes such as introducing a premium equalisation mechanism; and the third a switch to a public underwriting model. 

ALA is opposed to the idea of a publicly underwritten model and “does not consider that there is any data which suggests that a premium equalisation model is necessary”. 

The details of Allianz’s submission, initially made confidential, have now been released publicly. The insurer does not support premium equalisation and is against a publicly underwritten model. 

Allianz says it supports the review “examining whether the current scheme is meeting its key objectives” and that price “should not be the sole determinant of the success and sustainability of the scheme”. 

“We suggest a “matrix of measures reflective of the services provided by the insurer and which provide a more nuanced picture of the scheme relativities,” the Allianz submission says. 

Broad themes that the measures may incorporate are return to work/activity and value-based outcomes for injured people; complaints handling and dispute management practice; data quality and reporting; and measure of efficiency and delivery of claims management services. 

Allianz also says the review “provides the perfect opportunity to revisit the required capital with the view to reducing the capital allocated to CTP or increase the ceiling rates (to broaden the range) to enable insurers to achieve their target return on capital and increase price competition”. 

Click here for more from the Allianz submission.