Green & Pink = Registration
Sydney Morning Herald
Thursday May 30, 1991
THE Federal Government deregulated the airlines and look what has happened: the air-traveller has never had it better - you can almost write your own ticket, so to speak.
Now deregulation is about to descend on the third party insurance industry in NSW, and it is the motorists' turn to pick up the benefits.
From July 1, 13 insurers will be vying for the business of covering vehicle owners and drivers against damages claims for injury as a result of accidents
The most immediate and obvious result is that third party premiums will be cheaper - about $80 a year cheaper, in fact, although this varies according to the terms on offer from the individual insurers.
But this saving will not be without a little effort on the part of vehicle owners - and that is where the new green slip system comes into play.
From July 1, all motorists in NSW will have to produce a green slip - which will be proof that they have paid for third party insurance - before they can re-register their car, truck or motorcycle.
The present system requires motorists to get a pink slip - which serves as authentication of the roadworthiness of their vehicle - before they pay their registration and third party insurance fees. This requires a roadworthy check at an authorised garage. No pink slip, no registration renewal.
The green slip system will require twice the legwork - motorists will need to produce a pink slip and a green slip - to affect registration renewal.
This new system is certain to confuse many motorists and the Government is spending more than $2 million on an advertising campaign to explain how it works - or how the Government hopes it will work.
How successful this campaign is will be seen in the months from July 1, when motorists all over the State gradually realise the new era of deregulation has arrived.
No-one in the Government or in the Motor Accident Authority (MAA), which is the body established to supervise the new scheme, expects many problems. But they are hoping that most people will adjust to it quickly and the others can be taught how it works.
To understand how the new scheme works you have to go back a couple of years to the election of the Greiner Government in 1988.
And it's important to understand that the main part of your car registration bill is the fee for compulsory third party personal injury insurance. That insurance is what provides the money to people who are injured in car accidents.
When Mr Greiner became Premier, there was in place a third party personal injury insurance scheme called Transcover which he had promised to abolish.
Third party personal injury insurance now makes up about $340 for the average Sydney car out of a total registration bill of about $520.
Under the Transcover scheme, people injured in car accidents were entitled to have their medical and rehabilitation expenses paid for, but it did not allow them to sue other drivers for pain and suffering for injuries they received in car accidents, as they used to be able to do under the common law scheme that preceded Transcover.
The scheme set up by the Greiner Government is different to the old one in several respects. First, it allows some right to sue for pain and suffering for serious injuries, as was the case under common law.
But the major change is deregulation.
Instead of having the Government Insurance Office in charge of all third party insurance, that business has been given to 13 insurers including the GIO.
Each of these 13 companies was allocated a randomly selected share of motorists when the scheme was set up back in 1989. All 13 companies have charged motorists exactly the same rates for their third party insurance for the past two years because the Government has set one rate.
But when deregulation takes effect on July 1, each company will be able to charge pretty much whatever rate it likes, provided the Government has agreed to the rates.
From the information available so far, most companies are likely to offer big reductions, probably of at least $80, once the new system starts.
The present rates were set at $340 because that was how much the Government believed would be needed to cover the cost of claims and to provide some profit for the companies.
But claims for the first two years have been far fewer than was expected and the companies are all in a position to slash rates and still turn a profit.
Competition is certain to be keen as companies fight to get bigger shares of the market.
To attract business, the companies are expected to offer deals. Some have proposed free third party insurance for those customers who agree to transfer all other insurance - such as comprehensive car insurance and household insurance - to their companies.
One company has done a deal with BP service stations so that motorists will be able to get their green slip at the same time as they get a pink slip.
Some companies have made arrangements with banks so that motorists can pay their money there. All companies are likely to accept payment for a green slip by mail or credit card.
The major insurers, GIO and the NRMA, already have a big network of offices where green slips will be available.
Once motorists have their green slips they will need a pink slip, their registration renewal form and the money to cover other Government fees such as registration and weight tax before they can get their registration renewed.
One of the problems the Government faces is that most people don't bother renewing their car registration until the last day or two before it expires.
If they delay until the last minute when the new system starts, they may find they are short of time, especially if they want to shop around to find the best deal.
The first year of the deregulated system will be especially important as many motorists will be unlikely to swap insurers once they have selected one.
The GIO and the NRMA are heavily favoured to pick up a substantial portion of the business simply because they are well-known, they have a large network of retail outlets and they are regarded as safe.
Despite the publicity the new system will receive, it is the confusion that will accompany it that has the Government worried. The saving grace is that as car registration is spread over the whole year, most people will have considerable time to adapt to it.
© 1991 Sydney Morning Herald
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