featured image

Pricing of CTP Greenslips

NSW CTP scheme is underwritten privately. This simply means that insurers’ private capital investment is at risk. Because there are seven insurers in NSW currently providing compulsory third party insurance they can compete with each other in order to achieve reasonable returns on their investment.


The MAA acts as a regulator to make sure premiums are reasonable and fairly set according to the vehicle types and risk levels. However they are not responsible for setting the actual greenslip prices. They simply provide a guideline as to how prices should be set and what procedures need to be followed when changing prices. Price changes submitted by the insurers can either be accepted or rejected by the MAA depending on whether it conforms to the PDG.

The MAA is still involved in meticulously consolidating the insurer price filings in order to refine the framework to make sure prices are set fairly and reflect all the necessary evidence available at that time. This involves a more comprehensive process with enhanced evaluation tools being used.

The PDG also includes premium relativities for different class of vehicles along with the rating district. According to various classes and district of different vehicles and their claims statistics, some new relativities were introduced in February 2013. Insurers need to use these relativities to come up with new prices and apply appropriate discounts or loadings keeping in mind the risks involved with different types of vehicles and drivers. It should be made sure that these prices fall within the approved range of the MAA.

Insurers use different factors to determine the level of risk associated with drivers. This includes the age of driver and the vehicle, driving history and claims history, and the age of any young drivers involved. Because different insurers use these factors differently to compete in the market, customers are able to shop around before choosing their insurer.

According to the MAA Annual Report 2013, the historically low bond yields, inflation and increases in claims frequency and its costs has greatly affected the greenslip prices over the years. This report also highlighted that 2013 greenslip price for a Sydney metropolitan passenger vehicle increased from $464 in 2012 to $505.

As per the Report, the total insurance premium for the 2012-13 financial year was $1.95 billion compared to $1.76 billion in 2011-12. This is an increase of approximately 11%. The report that NSW had a 2% increase in the total number of registered vehicles, from 4.9 million to $5 million.