The NSW CTP scheme in practice – two years on
At a roundtable conducted by the Injury Compensation Committee of the Law Society of NSW in 2019, two years after the introduction of the Motor Accident Injuries Act 2017, it was found that lawyers need more information on the NSW compulsory third party insurance (CTP) scheme, its operation and how problems are being addressed.
Feedback from stakeholders, including injured parties, suggested many were finding the scheme complex and confusing. It was suggested that providing more information to legal practitioners could clarify the scheme and help them to manage its significant changes.
Differences between statutory benefits and common law damages
One of the fundamental changes in the new scheme was that the MAI Act provides for two types of claims – statutory benefits and common law damages – with each having its own set of processes. Some of the differences between the two claim types are outlined below.
- While statutory benefit claims are made in the immediate aftermath of the accident, common law claims cannot be made until 20 months have passed. An injured person may be entitled to statutory benefits for a loss of earnings or earning capacity, or to cover care and treatment of injuries caused in the accident, provided it is reasonable and necessary. However, common law claims for damages will not cover treatment or care for injuries, only covering payments of non-economic loss and some economic losses.
- Statutory benefits will cover “reasonable” funeral expenses for those killed in an accident. (For more information please see my article Paying for funeral expenses following a road accident death.) However, claims for headstones and financial support for dependents under the Compensation to Relatives Act are common law claims.
Minor injury definition and its impact on claims
The “minor injury” definition in the MAI Act has caused confusion among stakeholders, with lawyers finding it difficult to work out whether an injury is minor or not due to a lack of guidance.
The Act defines minor injury as a soft tissue injury or a minor psychological injury or psychiatric injury.
Section 1.6(2) contains a further explanation of a soft tissue injury, as “tissue that connects, supports or surrounds other structures or organs of the body”, but not an injury “to nerves or a complete or partial rupture of the tendons, ligaments, menisci or cartilage”. A minor psychological or psychiatric injury is one that is not a recognised psychiatric illness.
Due to the implications of what it can mean to a claim, being able to distinguish between a minor and a non-minor injury is crucial. This is because under the scheme, if an injured person only has minor injuries, they will not receive weekly income support benefits after the first 26 weeks and they will usually not be entitled to treatment or care, nor are they entitled to damages under a common law claim.
Disputing a decision under the new scheme
An injured person who is not satisfied with the outcome of their claim can request an internal review. Should it need to be escalated further, the dispute can be referred for determination.
Under the new scheme, the Act created a unit within the State Insurance Regulatory Authority (SIRA), known as the Dispute Resolution Service (DRS), to handle disputes. DRS staff include merit reviewers, claims assessors, medical assessors and SIRA staff. Claims assessors continue to assess claims, as they did previously, but now also have the ability to approve common law claims for those with no legal representation.
Under the new scheme, there is only one, short, application form for referring a dispute to DRS. From there, the dispute resolution officers identify the dispute type and the required documentation.
Claims statistics arising from the scheme
The most recent data published by SIRA (from September 2018) noted that under the new scheme:
- Premiums have fallen by 20% (from 30 June 2017 to 30 June 2018), which has saved motorists between $130 and $200 per vehicle.
- More than $138 million dollars was returned to vehicle owners through green slip refunds (as at 30 June 2018).
- Compared to expectations, there have been fewer claims and at-fault claims reported, more injuries assessed as minor injuries; and payments have been lower.
It has also been reported that it cannot be determined yet if more of the premium is going to injured people than occurred previously. In addition, although insurers have forecast profits at eight per cent, it will not be known for years if this has been achieved.
Ultimately, the NSW CTP scheme should provide justice and payment of fair benefits. While it is quite complex in regard to compensation and dispute resolution, it is hoped that the upcoming review and ongoing work of the Injury Compensation Committee, in conjunction with SIRA, will resolve some of these challenges and help the NSW CTP scheme to achieve its aim.
The original version of this article appeared in the Journal of the Law Society of NSW in 2019.