Motor Accident Injuries Act 2017 No 10
Division 2.3 Insurance premiums
2.19 Authority guidelines for the determination of premiums
(cf ss 24 and 27A MACA)
(1) The Motor Accident Guidelines may provide for the determination of insurance premiums for third-party policies.(2) Motor Accident Guidelines may (without limiting the generality of subsection (1))—(a) specify the manner in which premiums are to be determined, and(b) require licensed insurers to specify how they have determined premiums, and(c) specify the factors to be taken into account in determining premiums (including in determining the reasonable cost of claims and claims settlement expenses), and(d) specify the maximum or minimum (or both) rate of estimated investment earnings, superimposed inflation, claims frequency, acquisition expenses, agents’ commission or other expenses or assumptions used in the determination of premiums, and(e) exclude, from being taken into account in the determination of premiums, acquisition expenses not directly relevant to the acquisition of third-party insurance business or other expenses of the insurer, and(f) specify the nature of the additional information and reports that the Authority may require licensed insurers to furnish with the premiums they file or to justify premiums they have filed (including with respect to estimated investment earnings, superimposed inflation, claims frequency, the verification of assumptions, estimated profit, capital allocation to third-party insurance business and other relevant matters), and(g) provide for a refund of part of the premium paid for a third-party policy during or after the period for which the policy is issued by reference to digital information recorded about the safe driving of the motor vehicle during that period or to other factors.(3) The Motor Accident Guidelines may only specify maximum rates of assumptions used in the determination of premiums if the Authority is satisfied that they are reasonable and will result in insurers having sufficient premium income to meet their liabilities in relation to third-party policies and to make a reasonable profit.(4) The cost of claims for the purpose of determining insurance premiums for third-party policies must take account of the effect of any exclusion or restriction on claims under this Act (including under section 3.32).
2.20 Third-party premiums
(cf s 25 MACA)
(1) A licensed insurer must not charge an insurance premium for a third-party policy, except in accordance with this Division.(2) The licensed insurer must file with the Authority a premium or set of premiums it proposes to charge.(3) Two or more licensed insurers can jointly file a premium or set of premiums that they propose to charge.(4) The licensed insurer may, on and from the proposed commencement date for the premium, charge a premium that has not been rejected by the Authority within the period allowed under this section for rejecting a premium. Except as provided by section 2.22, the licensed insurer must not charge any other premium on and from that proposed commencement date.(5) The proposed commencement date for a premium is the date specified in a filed premium as the date on and from which the proposed premium will be charged. The proposed commencement date cannot be earlier than the end of the period allowed for rejecting a premium but can be changed (with notice to the Authority) to accommodate a change in the period allowed for rejecting a premium.(6) The period allowed for rejecting a premium is (subject to subsection (7)) the period nominated by the insurer when filing the premium, being a period of not less than 6 weeks or such shorter period as the Authority may allow in a particular case.(7) Time does not run in relation to the period allowed for rejecting the premium of a licensed insurer from the day on which the Authority requests any further information from the insurer, because the insurer has failed to comply with its obligations under this Act or the Motor Accident Guidelines in relation to the filing of the premium, until the day on which the insurer complies with that request for further information.(8) A premium may only be rejected as provided by this section or section 2.22.
2.21 Filing of premiums
(cf s 26 MACA)
(1) A licensed insurer must file its premiums with the Authority on such occasions or with such frequency as is required by the Motor Accident Guidelines and may (subject to any limitations specified in those Guidelines as to the frequency with which premiums may be filed) file its premiums with the Authority at such other times as the insurer considers appropriate.(2) A licensed insurer must also file its premiums with the Authority whenever required to do so by the Authority by notice in writing to the insurer. The notice must allow a period of at least 8 weeks after the notice is served for premiums to be filed.(3) An insurer files its premiums by filing with the Authority a full set of the insurance premiums it proposes to charge for third-party policies that are taken to have been issued by it together with such additional information, including actuarial reports, as the Authority may reasonably require.(4) Two or more licensed insurers can jointly file a premium or set of premiums under this section.(5) An insurer must pay to the Authority such fees as may be required by the Motor Accident Guidelines to be paid by insurers in connection with the filing of premiums by insurers.(6) It is a condition of a licence granted under this Act that the insurer must comply with this section.
2.22 Rejection of premiums by Authority
(cf s 27 MACA)
(1) The Authority may reject an insurance premium filed with it under this Division if it is of the opinion that—(a) the premium is, having regard to actuarial advice and to other relevant financial information available to the Authority, excessive or inadequate, or(b) the premium does not conform to the relevant provisions of the Motor Accident Guidelines.(2) Written notice of the Authority’s rejection of a premium, and the reasons for the rejection, must be given to the licensed insurer.(3) If the Authority rejects a premium of a licensed insurer, the licensed insurer may request the Authority to reconsider the rejection.(4) Pending its reconsideration, the Authority may request an actuary to determine a provisional premium.(5) A provisional premium so determined has effect, pending the Authority’s reconsideration, as if it were an insurance premium which may lawfully be charged by the licensed insurer concerned.(6) If the Authority has not withdrawn its rejection of a premium within 4 weeks after a request to reconsider the rejection, the matter is to be arbitrated under this section. The following provisions have effect—(a) The Commercial Arbitration Act 2010 applies to an arbitration under this section, subject to this Act and the regulations. The Authority and the licensed insurer concerned may by agreement appoint a person to act as arbitrator in connection with the matter. Failing agreement within 7 days, paragraphs (b) and (c) apply.(b) The Independent Pricing and Regulatory Tribunal (established by the Independent Pricing and Regulatory Tribunal Act 1992) may act as arbitrator to hear and determine such a matter.(c) Alternatively, that Tribunal may appoint a person to act as arbitrator in connection with the matter. The person is to be appointed from a panel constituted by the Minister and consisting of persons who have appropriate knowledge and understanding of economics, general insurance and the interests of consumers.(d) The regulations may make provision for or with respect to the arbitration of matters under this section.(7) The arbitrator may determine the premium that may be charged by the licensed insurer.(8) The Authority or an arbitrator is not bound by any provisions of the Motor Accident Guidelines referred to in section 2.19 (2) (c) or (d) that the Authority or arbitrator considers would be unreasonable to be applied in the particular circumstances of the case.
2.23 Insurers to disclose profit margins
(cf s 28 MACA)
(1) A licensed insurer is required to disclose to the Authority the profit margin on which a premium is based and the actuarial basis for calculating that profit margin.(2) The Authority is to assess that profit margin, and the actuarial basis for its calculation, and to include a report on that assessment in its annual report.
2.24 Risk equalisation
(cf s 29 MACA)
(1) The purpose of this section is to achieve an appropriate balance between the premium income of an insurer and the risk profile of the third-party policies issued by the insurer.(2) The regulations may impose any one or more of the following arrangements on licensed insurers—(a) an arrangement for allocating high risk or low risk third-party policies among insurers,(b) an arrangement for the adjustment of premiums collected in respect of third-party policies and for the allocation and transfer of those premiums among insurers,(c) an arrangement for the adjustment of the costs of claims for motor accidents covered by high risk or low risk third-party policies and for the allocation and transfer of those costs among insurers.An allocation of premiums or costs is to be made generally in accordance with the market share of each insurer or in any other appropriate manner.(3) Any such arrangement may require insurers to provide information to the Authority about third-party policies or claims, to re-imburse the Authority for the costs of administering the arrangement and to take other measures to give effect to the obligations and liabilities of insurers under the arrangement.(4) It is a condition of an insurer’s licence under this Act that the insurer must comply with any such arrangement.(5) The regulations may authorise any matter arising under any such arrangement to be determined in accordance with the Motor Accident Guidelines.(6) For the purposes of this section, high risk or low risk third-party policies are policies of a kind that the Authority determines incur a higher or lower disproportionate share of liability for the total cost of claims for motor accidents.(7) An arrangement under section 29 of the Motor Accidents Compensation Act 1999 that is in force on the commencement of this section is (subject to the regulations) taken to be an arrangement under this section. Any such arrangement may be varied by the regulations or by the agreement of the parties to which it applies.
2.25 Adjustment of premiums and Fund levies in case of excess profits or excess losses
(1) A review by the Authority of premium income of licensed insurers to determine whether premiums and Fund levies under Division 10.4 should be adjusted to avoid excess profits or excess losses—(a) may be undertaken, with the approval of the Board of the Authority, if the average realised underwriting profits of insurers for 1 or more years are substantially greater or less than the average filed profits of insurers, and(b) must be undertaken if the average realised profits of insurers for 1 or more years are greater than the average filed profits of insurers by 2% or more of the average filed premiums, and(c) must be undertaken if, for at least 2 years in a row, the average realised profits of insurers are less than the average filed profits of insurers by 5% or more of the average filed premiums.(2) The Motor Accident Guidelines may, following such a review, make special arrangements for the adjustment of premiums and Fund levies under Division 10.4 to avoid excess profits or excess losses, including an appropriate refund of premiums previously paid by policy holders or an appropriate reduction or increase in future premiums payable by policy holders.Note.Motor Accident Guidelines with respect to insurance premium matters may only be made with the approval of the Board of the Authority—see section 10.3.(3) If, as a result of the exercise of a function under this section, the Authority determines that premiums and Fund levies under Division 10.4 should be adjusted to avoid excess profits, the Authority must take action to make adjustments to avoid those excess profits.(4) The Authority may, following any adjustment referred to in subsection (2) of premiums and Fund levies under Division 10.4 to avoid excess losses, direct payments from the Motor Accidents Operational Fund under that Division to insurers corresponding to any increase in Fund levies otherwise payable.(5) The Authority must, following any adjustment referred to in subsection (2) of premiums and Fund levies under Division 10.4 to avoid excess profits, direct insurers to make payments to the Motor Accidents Operational Fund under that Division corresponding to any reduction in Fund levies otherwise payable.(6) An amount payable to or from the Motor Accidents Operational Fund under subsection (4) or (5) is not recoverable from or payable to policy holders.(7) The Motor Accident Guidelines may provide for an adjustment under this section to be made in relation to previous, current or future periods.(8) It is a condition of an insurer’s licence under this Act that the insurer must comply with the requirements of any special arrangement under this section.(9) In this section—excess loss means a shortfall in underwriting profit of an insurer below the filed profit of the insurer.excess profit means underwriting profit of an insurer in excess of the filed profit of the insurer.filed premium means a premium filed with the Authority under this Division (and not rejected by the Authority).filed profit means estimated underwriting profit on which filed premiums are based.
2.26 Special provisions relating to taxis and hire vehicles and other vehicles
(1) The Motor Accident Guidelines relating to the determination of insurance premiums for third-party policies may make provision for part of the premium to be paid before the issue of a policy and for the remainder of the premium to be paid during the period for which the policy is issued.(2) Any such determination—(a) may be made in relation to taxis or hire vehicles or in relation to any other class of vehicles, and(b) may provide for the basis on which the remainder of the premium is to be paid (including on the number of trips undertaken by the vehicles, the distance travelled by the vehicles or other activity in which the vehicles are engaged), and(c) may authorise the remainder of the premium to be paid on behalf of the persons to whom the third-party policies are issued (including by the providers of passenger services or booking services relating to taxis or hire vehicles or by other persons conducting a business relating to the vehicles).(3) Section 2.8 (Cancellation of third-party policies) extends to the cancellation of a third-party policy if a payment required to be made during the period for which the policy is issued has not been duly paid.(4) The Authority may, by notice in writing served on a person conducting a business relating to vehicles (including the provider of a passenger service or a booking service), require the person to provide (within the time and in the manner specified in the notice) any information that the Authority reasonably requires for the purpose of determining the guidelines for insurance premiums for third-party policies for vehicles of that kind.(5) A person to whom such a notice is given must not—(a) fail to comply with the notice, or(b) provide information to the Authority that the person knows is false or misleading in a material particular.Maximum penalty—100 penalty units.(6) In this section, taxi or hire vehicle and provider of a passenger service or booking service have the same meanings as they have in the Point to Point Transport (Taxis and Hire Vehicles) Act 2016.