Parliament road safety review flags CTP reforms

A Federal Parliament committee inquiry into road safety has proposed that Australia consider reforming compulsory third party (CTP) insurance as part of measures to reduce vehicle accidents.

The committee heard current schemes limit incentives for insurers to encourage safer road use, and adoption of UK-style arrangements could reduce fatal and serious injury crashes, while also resulting in significant financial savings.

“The committee recommends that the Australian Government work with state and territory governments, the insurance industry and other road safety stakeholders to investigate opportunities to reform motor vehicle insurance and to develop a roadmap towards policy and law reform,” the report says.

Richard Tooth, a director at consulting firm Sapere and an Adjunct Senior Lecturer with the Institute of Transport and Logistics Studies at the University of Sydney, told the committee that in the UK a person buys one product from an insurer, which sets premiums according to risk, with cover provided for vehicle damage and personal injury.

But in Australia CTP premiums are regulated and risk equalisation arrangements mean that safer road users are effectively subsidising unsafe road users.

“Dr Tooth indicated that because of these differences, insurers in Australia are considerably less active in the road safety space, as there are limited incentives for them to encourage safe road use,” the report says.

“Moreover, claim costs for insurers associated with death and serious injury are considerably lower than the societal benefits of prevention. For example, the cost to an insurer for a fatal injury claim is between $200,000 and $500,000, while the societal benefit of prevention has been estimated at $8 million.”

The Joint Select Committee on Road Safety final report includes 61 recommendations, which also focus on road infrastructure and encouraging uptake of vehicles fitted with safety features.

The inquiry recommends regulation of e-scooters and other micro-mobility devises to ensure the safety of riders, pedestrians and other road users and also targets safety in the heavy vehicle industry.

The report is available here.