Queensland insurance company RACQ will no longer offer compulsory third party (CTP) to drivers, blaming years of significant financial losses.
RACQ chief executive officer David Carter said the scheme was no longer viable after 20 years of providing the service to more than 25,000 people injured on Queensland roads.
“The scheme’s design allows for all participating insurers to be profitable; however, this assumes an equitable distribution of risk,” Mr Carter said.
“In recent years, RACQ’s risk profile has worsened through no fault of our own, resulting in significant losses for the club.”
CTP premiums are set by the Motor Accident Insurance Commission (MAIC).
A spokesman for Queensland Treasurer Cameron Dick said Queensland drivers wouldn’t have to be concerned about their premiums going up because of RACQ’s decision.
“The participation of an individual insurer in the CTP scheme will have no impact on premiums paid by Queensland drivers or the viability of the scheme itself,” the spokesman said.
RACQ said it would stop offering CTP insurance cover from October 1, while all existing RACQ CTP policies would remain in place.
The motoring body says analysis showed there was a significant difference between the most profitable and least profitable insurers in the scheme over the past five years.
Mr Carter said for every $100 of premium RACQ received in 2022, $123 was paid out in claims.
He said this was due to the increased frequency and severity of claims that the club received relative to the scheme average.
“We saw little change in FY23 and in the absence of any changes to the way premium is shared between insurers, the outlook shows no signs of material improvement,” Mr Carter said.
Mr Carter said the RACQ decision to withdraw from the scheme was not taken lightly, but after several years of reviews by the state government and MAIC, it ultimately decided to drop the service.
“Premiums paid by Queensland motorists are fair and do not need to increase and should not increase now because RACQ has withdrawn from the scheme,” Mr Carter said.
“However, following several years of raising concerns with the state government and MAIC, it’s clear that even the most recent scheme review is unlikely to achieve a level playing field or restore fairness across the insurers.
“The unfortunate reality is despite the extensive steps we have taken over many years to improve our position, including support provided by our reinsurance partners, it is no longer viable for us to continue participating in the scheme.”
Mr Carter said the decision would not compromise or cause any disruption to CTP claimants with a claims process under way or who may have a claim in the future.
“RACQ will continue to provide a claims management service to ensure our existing CTP claimants continue to receive the same high standard of service we are known for, even after our exit from the scheme,” he said.
Queensland motorists with RACQ CTP insurance will be transitioned to another insurer on renewal of their registration over the following 12 months.
Originally published as RACQ will no longer offer CTP insurance
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