Reforms to CTP

Why the need for changes?

Reforms to CTP

Why the need for changes?

On 1 July 2013, changes to South Australia’s Compulsory Third Party (CTP) Insurance Scheme came into effect improving the Scheme’s affordability and delivering a consistent compensation system for those injured in a motor vehicle crash.

South Australia’s CTP premiums had become the least affordable in Australia - unacceptably high in comparison to that charged in other Australian states.

Since 2000, CTP premiums had grown at an average of 5% – the highest rate of increase in Australia. Projections indicate that this rate of increase will continue into the future, placing increased pressure on the Scheme.

At the same time, people catastrophically injured in a motor vehicle crash often received no compensation from the CTP Scheme for the injury sustained (for example, the driver who hits a kangaroo and becomes a quadriplegic or the mother who becomes blind because she crashed after being momentarily distracted by her children) because no other vehicle was at fault. The previous CTP Scheme only provided compensation if fault for the crash was attributed to another person.

Claims for minor injuries also overwhelmed the system. In 2012, minor injuries accounted for 90 per cent of all claims with around 40% of compensation payments (in excess of $100 million a year) being paid to claimants who had little or no time off work and required little medical treatment.

Legal costs (paid by both MAC and claimants) had also risen by about 50% since 2005 yet the proportion of payments going to the crash victims declined. The system was becoming unbalanced and unaffordable.

Reforms to CTP

What are the key changes?

Reforms to CTP

What are the key changes?

From 1 July 2013:

  • Children under the age of 16 at the time of a crash that occurs in SA will qualify for ‘no fault’ compensation for ongoing medical costs irrespective of who was at fault for the crash.
  • The way injuries are assessed has changed. A new measure of injury severity, known as Injury Scale Values (ISV) has been introduced and assigns points from one to 100, based on objective medical evidence and consideration of the impact of the injury on the individual. Damages for non-economic loss will be available when an injury exceeds 10 points on the ISV scale.
  • Motor vehicle registration has become more affordable with CTP insurance premium dropping by $104 in 2013 for Class 1 Passenger Vehicle (reducing from $512 in 2012 to $408).  The reforms will also reduce the pressure on rising premium costs into the future.
  • The right to legal representation has not changed but new thresholds are in place for the reimbursement of legal fees. Legal costs are no longer being awarded if the total amount recovered by the claimant amounts to $25,000 or less. If they are between $25,000 and $100,000, costs are capped at the Magistrates Court scale.

From 1 July 2014:

  • All catastrophically injured motorists will be entitled to lifetime care and support irrespective of who is at fault for a crash that occurs in SA.

Reforms to CTP

How do the changes affect me as an injured person?

Reforms to CTP

How do the changes affect me as an injured person?

The changes are not retrospective, therefore any claim with a crash date on or before 30 June 2013 will be determined in accordance with the previous rules and compensation structure.

For claims with a crash date occurring on or after 1 July 2013, the changes can be summarised as follows:

Claim notification

A new claim notification process has been introduced.  A person wishing to make a claim after 1 July 2013, will need to complete and submit an Approved Injury Claim Form, including the Prescribed Authority.  Time limits also apply.  If the claim notification process is not followed, reasonable and necessary treatment expenses will not be paid as they are incurred.

Access to compensation

A new Injury Scale Values (ISV) table has been introduced to ensure consistency is applied when assessing a claimant’s entitlement to compensation.

The requirement to access the main compensation types are summarised as follows:

Pain and suffering

A person must receive an ISV assessment score exceeding 10 points to access this type of compensation. There is also provision for cases deemed to be exceptional, harsh and unjust to receive compensation for pain and suffering.

Future loss of earning capacity

A person must receive an ISV assessment score exceeding 7 points to access this type of compensation. There is also provision for cases deemed to be exceptional, harsh and unjust to receive future loss of earning capacity compensation.

When considering the potential for any future loss, it must be proven that there is greater than 20% chance that an event could eventuate. Once past and future loss of earning capacity is determined, a 20% reduction will be applied to this figure.

Voluntary services

A person must receive an ISV assessment score exceeding 10 points and have been provided with a service for at least 6 hours per week for 6 consecutive months to qualify. 

If a person qualifies, then an hourly amount has been prescribed and will apply to this type of compensation.

Consortium

A person must receive an ISV assessment score exceeding 10 points to access this type of compensation.

Other forms of damages have not been affected.

Reforms to CTP

FAQS about the reforms

Reforms to CTP

FAQS about the reforms

What do the reforms achieve?

The reforms make South Australia’s Compulsory Third Party (CTP) Scheme financially sustainable and more affordable for SA motorists. This is achieved by introducing thresholds to access some forms of compensation.  If you are entitled to a claim, reasonable medical treatment and past income can be compensated irrespective of the thresholds.

From 1 July, 2014, a new Lifetime Support Scheme will provide life-time treatment, care and support for those who are catastrophically injured in motor vehicle crashes in South Australia regardless of who was at fault.  Criteria will apply as to who is eligible to access benefits under this system.

Why is the system being overhauled?

Since 2000, CTP premiums had grown at an average of 5% – the highest rate of increase in Australia. Projections indicate that this rate of increase will continue into the future, placing increased pressure on the Scheme.

Claims for minor injuries also overwhelm the system. Around 40% of compensation payments (in excess of $100 million a year) are paid to claimants who have little or no time off work and require little medical treatment. At the same time, people catastrophically injured in a motor vehicle crash often receive no compensation from the CTP scheme for the injury sustained. The Scheme will continue to meet the medical costs of people injured in motor vehicle crashes and provide compensation for any necessary time off work, but the introduction of threshold for non-economic loss and some other categories of compensation will deliver CTP insurance premium reductions for all motor vehicle owners.

Motorists with a Class 1 registrations – passenger vehicles in the metro area – will receive a reduction in their CTP insurance premium (paid when they register their car) of $104 in 2013-14. From 2014-15, a new levy will be introduced to fund the Lifetime Support Scheme, but the overall cost to motorists with a Class 1 registration is still estimated to be $44 cheaper in real terms than in 2012.

What do these changes mean?

The CTP Insurance Scheme will retain its fault-based structure. This means that the owner or driver of a motor vehicle will be protected from liability to pay compensation (common law damages) to anyone who is injured in a motor vehicle crash because of their negligent or reckless driving.  The compensation will continue to funded by the CTP Scheme into which premiums are paid. 

The changes have been made to restrict the amount of compensation paid for some categories of injuries. Stronger emphasis is being placed on the prompt and optimal recovery of the injured person.

In the case of a person who is catastrophically injured in a motor vehicle crash in South Australia on or after 1 July 2014, the cost of treatment, care and support will be covered for life regardless of who was at fault.  This will be managed through a new Lifetime Support Authority that will maintain an ongoing relationship with the injured person. In addition, children under the age of 16 years, who are injured in a motor vehicle crash in South Australia, will have the cost of their treatment, care and support paid for regardless of who was at fault for the crash.

Other changes include:

Time off work: Compensation for loss of income during recovery will continue to be paid. However the amount of the damages will be reduced from 100% to 80% of lost earnings and continue to exclude the first week.

Compensation for other losses: Compensation for other losses will be subject to new thresholds. These thresholds may be assessed based on a report from an independent accredited health professional. The nature and severity of injuries will be measured against an Injury Scale Value (ISV) table.

These thresholds will reduce the level of lump sum payments for damages paid for minor claims. There are cases where individual circumstances may qualify for a lump sum where the threshold is not met, but it is considered that these situations will be limited to exceptional circumstances where the application of the threshold would be harsh and unjust.

1. Non-Economic Loss: Injuries assessed at exceeding 10 ISV points are eligible for compensation for non-economic loss (i.e. pain and suffering). The amount will depend on the severity of injury.

There is also provision for cases deemed exceptional, harsh and unjust, where the threshold is not met, to receive compensation for non-economic loss.

2. Voluntary Services: Voluntary services provided by family members will be eligible when the injuries are assessed at exceeding 10 ISV points and services have been provided for at least six hours a week for at least 6 consecutive months. 

3. Future Economic Loss: Injuries assessed at 8 ISV points or more may be eligible for compensation for future loss or impairment of earning capacity. Compensation for possible future changes to earnings will only be payable where these scenarios are evaluated as having a 20% or more chance of occurring. 

Once past and future loss of earning capacity is determined, a 20% reduction will be applied to this figure. 

There is also provision for cases deemed exceptional, harsh and unjust, where the threshold is not met, to receive compensation for future economic loss.

Will compensation be harder to get?

Payment of eligible medical expenses will not change, as long as you have complied with the claim notification process.

Under the new Injury Scale Value (ISV) thresholds, minor injuries will be compensated only for medical and treatment expenses, and past time off work.  This excludes a person who in the past had minor injuries and who may have obtained compensation for pain and suffering and voluntary services provided by their family. Similarly, a person whose injuries are assessed at or below 7 points will not receive compensation for loss or impairment of future earning capacity.

What happens if I had a car crash before 1 July 2013?

These reforms are not retrospective. This means that your claim will continue to be processed with the same rights and entitlements that existed prior to 1 July, 2013. However if you are lodging a claim after 1 July 2013 irrespective of the crash date, you will need to comply with the new claim notification process.

I had a crash before 1st July 2013, and another one after, how do the claims get managed?

If you have a crash after 1 July 2013, and have an existing claim being processed for a crash prior to 1 July 2013, the two claims will be dealt with under different rules, with different entitlements.

Am I entitled to get legal advice?

You will not lose your right to sue – if you could sue before the reforms, you will still be able to sue. 

You may not need a lawyer however, you are able to hire a lawyer if you choose.  You should note that legal costs for minor claims where the total amount recovered is $25,000 or less will no longer be reimbursed through the CTP Scheme and limitations apply to claims between $25,000 and $100,000.

Irrespective of the amount of legal costs that may be recoverable, there will always be a component of legal fees (usually called solicitor client fees) that are not claimable from the CTP insurer.  In addition, some lawyers charge in excess of the approved Court Scales, which will not be payable by the CTP insurer. Therefore, you should ask your solicitor to fully explain their billing practices. Your solicitor should provide you with this information in writing and it should set out:

  • Nature of work expected to be undertaken.
  • Method of billing and any additional costs or fees to be incurred.
  • Estimate of expected legal costs (which should be reviewed as your case progresses).
  • Your rights regarding any dispute between you and the lawyer.
  • What is meant by no fault cover for children?

For crashes on or after 1 July 2013, children under the age of16 at the time of the crash, who are injured in South Australia will be compensated for necessary and reasonable treatment, care and support (as defined) without having to prove anyone else was at fault.

Do these changes apply if I am involved in a crash in another state?

The changes to the law assessing your entitlement to damages are only relevant if the crash occurs in South Australia.

If the crash occurs in another state your entitlement to compensation will be assessed according to the rules and laws of that state.

Reforms to CTP

Restriction to Legal Fees

Reforms to CTP

Restriction to Legal Fees

The right to legal representation has not changed but new thresholds are in place for the reimbursement of legal fees. Legal costs through the CTP Scheme are no longer being awarded if the total compensation payment is $25,000 or less. Limitations also apply to claims where the total amount of compensation is between $25,000 and $100,000.

Irrespective of the legal costs that may be recoverable, there will always be a component of any legal fee (usually called solicitor client fees) that is not claimable from the CTP insurer. Therefore, you should ask your solicitor to fully explain their billing practices. Your lawyer should provide you with the following information in writing:

  • Nature of work expected to be undertaken.
  • Method of billing and any additional costs or fees to be incurred.
  • Estimate of expected legal costs (which should be reviewed as your case progresses).
  • Your rights regarding any dispute between you and the lawyer.

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