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. Under the Compulsory Third Party Insurance Regulation Act 2016 (CTPIR Act), the CTP Regulator is responsible for determining premiums on the basis of one or more of the following:
- vehicle type
- vehicle use
- garaging location
- entitlement under the GST law to an input tax credit for compulsory third party insurance premiums.
Vehicle type and use are accounted for within all premium classes. Garaging location is determined by insurance districts for the premium classes where garaging location applies. Input tax credits may apply if you use your vehicle for business purposes.
The CTP Regulator sets the upper and lower premium limits at least annually for each premium class using independent expert actuarial analysis and advice.
The primary factors used in calculating the premium limits are the estimated number of injury claims resulting from accidents caused by vehicles in a particular premium class (claim frequency), 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 set so the premiums are sufficient to meet the cost of CTP compensation claims and there is fairness in how motor vehicle owners fund the Scheme.