SIRA targets excess compulsory third-party insurance profits

The State Insurance Regulatory Authority (SIRA) has recovered $542.9 million from compulsory third-party (CTP) insurers as part of its oversight of excess profits over the past four years.

The transitional excess profit and loss (TEPL) mechanism, a regulatory tool designed for retrospective adjustments, was used to reclaim funds during the 2024 assessment cycle.

Excess CTP profits

The reclaimed amount will be directed to the Motor Accidents Operational Fund (MAOF) to reduce the levy for 2025. This allocation will enable a $90.5 million reduction in costs, lowering Green Slip premiums by an average of $14 for drivers in New South Wales.

The TEPL mechanism works alongside the forward-looking premium guidance outlined in Schedule 1E of the Motor Accident Guidelines.

While the prospective guidance estimates premiums based on projected trends and past data, TEPL adjusts for discrepancies by using actual financial outcomes.

Workers’ compensation premiums

SIRA also recently retrieved over $10 million in unpaid workers’ compensation premiums from New South Wales employers who underreported wages. This action follows investigations into 81 businesses identified through data analysis and regulatory engagement.

The investigations uncovered an additional $450 million in wages, with 74 cases referred to SIRA’s enforcement team and seven resolved by its inspectorate.

Employers found in breach of workers’ compensation obligations, including one brokerage, were issued penalty notices for failing to submit accurate wage declarations within the required timeframe.

Using predictive data models, SIRA identifies discrepancies by cross-referencing claims and policy data, enabling it to prioritise cases for follow-up. The agency highlighted the risks underinsurance poses to the financial health of the workers’ compensation system.

Compliance and oversight measures in September 2024 quarter 

SIRA’s quarterly report for the period ending September 2024 outlined its activities across schemes, including CTP and workers’ compensation. These efforts included compliance initiatives, enforcement actions, and audits aimed at upholding system integrity.

CTP insurance

• Insurer compliance: SIRA initiated six new remediation plans for licensed insurers, with 16 plans under monitoring by the end of the quarter.
• Fraud investigations: Ten new fraud cases were opened, with one leading to a court ruling imposing a 12-month Intensive Correctional Order.

Workers’ compensation

• Employer audits: SIRA engaged 1,500 employers suspected of lacking coverage, resulting in 988 new policies and $4 million in additional premiums. This action extended coverage to 5,841 workers.
• Penalties and recoveries: The regulator issued 73 penalty infringement notices and referred $1.3 million in unpaid premiums to Revenue NSW for collection.
• System reviews: Two audits of the Nominal Insurer were conducted, examining claim indexation and hearing aid management.