South Australians Reap the benefits of the Privatisation of CTP Insurance – Should Workers Compensation Be Next?
South Australia made the bold move to privatise Compulsory Third Party (CTP) insurance in July 2016. With a staged process put in place, in July 2019 motorists were finally able to choose their own insurer.
Not surprisingly, the competition that is driven by privatisation led to premium savings of close to 30% for some motorists, with the privatisation of CTP insurance driving a collective saving of over $80 million for South Australian motorists.
In 2014, Chris McHugh quite rightly questioned why some states continued to maintain state-owned monopolies in Workers’ Compensation “when the private sector can deliver better outcomes for customers, injured workers and the economy”, and greater minds than mine have identified that privatisation of workers compensation in NSW and Victoria would lead (on average) to a decrease in premiums of 25%.
The results achieved in CTP in South Australia brings with it two questions:
1. Steven Marshall, the Premier of South Australia, has touted the success of the privatisation of CTP insurance. If this has been such a success, why hasn’t the South Australian Government floated the concept of privatisation of Workers’ Compensation?
2. Both Victoria and NSW have been failing financially in recent years. These failings are impacting the financial viability of both schemes. Rectifying this will require significant increases in premium to avoid ongoing growth in outstanding claims liability. Privatisation not only provides benefits to injured workers, employers and the economy, it also alleviates the governments liability for future claims. Given the above, what are the factors preventing Victoria and NSW from exploring privatisation?
With over twenty years’ experience in Workers’ Compensation, Simon is a vocal advocate for employers in a scheme that often leaves them feeling powerless and frustrated. Simon and his team work with employers across Australia, helping them take back control of their Workers’ Compensation programs.
