Suncorp says data on Queensland’s compulsory third party arrangements “points to a scheme in need of reform”, with the company’s market share to grow following last year’s withdrawal of RACQ Insurance.

The insurer says its Queensland CTP portfolio has been considered onerous since fiscal 2022, with combined operating ratios above 110%. Its annual results, reported today, include a $39 million onerous contract provision.

“I’m encouraged by the constructive discussions we’ve had with the Queensland government on a range of sensible reforms, which will have the effect of creating a more sustainable and competitive scheme while not adding to the cost-of-living burden for Queensland motorists or reducing their ability to receive benefits from the scheme,” Suncorp CEO Steve Johnston told a briefing.

He says Suncorp has a Queensland CTP market share of more than 50% and that is expected to grow as it inherits risk from RACQ Insurance at a higher rate than the other two insurers in the scheme.

“At its core, insurers receive the same price for most policies, even though their mix of business and the way they acquire business differs markedly,” Mr Johnston said. “This leads to a wide disparity of margins. 

“An outworking of this is there have been no new market entrants for more than 20 years, and the number of scheme participants has reduced to just three, with the exits of NRMA and RACQ.

“Additionally, all scheme participants have filed at the regulator-imposed price ceiling in each of the past 30 quarterly filings.” 

Slides presented at Suncorp’s annual results briefing showed insurer premiums remaining flat while average weekly earnings have risen 18% since the first half of 2021. 

RACQ Insurance, which had about a 25% share of the market in recent years, left the scheme last October, while NRMA Insurance departed in January 2014. 

RACQ argued it was disadvantaged by a portfolio with a greater proportion of older vehicles, young or inexperienced drivers, shorter policy terms and re-registered vehicles compared with other providers. An insurer cannot choose which risks to underwrite or refuse a motorist who selects them for cover. 

The Motor Accident Insurance Commission started early last year to review the CTP scheme but put the work on hold to focus on transition arrangements required due to RACQ’s departure.