The Regulator is responsible for determining CTP insurance premiums under the Compulsory Third Party Insurance Regulation Act 2016 (CTPIR Act).
South Australia’s CTP Scheme operates with a community rating model.
This means owners of a particular class of vehicle all pay the same premium based on the claims experience of that class, regardless of individual driver history or driving patterns.
A community rated scheme supports affordability of CTP premiums for all motor vehicle owners.
The community rating model is determined based on:
- Vehicle type
- Vehicle use
- Garaging location
- Entitlement under GST law to an input tax credit.
The vehicle type and use is accounted for within each premium class. The insurance districts are used to determine garaging location. Input tax credits may apply if you use your vehicle for business purposes.
The CTP Regulator sets the upper and lower premium limits annually for each premium class using independent expert actuarial analysis and advice.
The primary factors used in calculating the premium are the forecast claims frequency (the number of claims expected from accidents occurring in the premium year), claim size (the cost of the claims expected from accidents occurring in the premium year) and economic assumptions, for example wage inflation.
Included in the calculation of the CTP Insurer premium is an allowance for CTP business costs, managing the CTP claims and a profit margin.
The limits are intended to ensure premiums are sufficient to meet the cost of CTP compensation claims and that there is fairness in how motor vehicle owners fund the Scheme.
These limits can be reset should conditions change. For example, if the number of claims or the claims costs change, so too will the premiums.
CTP Insurers set their own CTP premiums for each premium class within these limits set by the CTP Regulator.
Scheme Administration Fees also form part of the total CTP premium and cover the costs of services that support the CTP scheme and the administration of the CTP Regulator. See more information on Administration Fees.