Late Payment Interest Changes After 2017 Reforms
Under NSW law, Compulsory Third Party (CTP) insurers must pay statutory benefits to injured road users within 28 days of a claim being accepted. If an insurer delays payment, interest is charged on the overdue amount. The 2017 reforms to the Motor Accident Injuries Act 2017 and Motor Accident Injuries Regulation 2017 introduced changes to how this interest is calculated, affecting claimants in Ashfield and other NSW areas.
How CTP Insurers Calculate Late Payment Interest
Before 2017, interest was calculated using a fixed rate of 10% per annum. The 2017 reforms replaced this with a variable rate tied to the Reserve Bank of Australia’s (RBA) cash rate. Under the new rules, interest is calculated as follows:
- Interest rate: The RBA cash rate in effect on the date the insurer receives the claimant’s claim form.
- Interest period: From the date the insurer receives the claim form until the payment is made.
- Maximum interest: No more than 10% per annum, regardless of the RBA rate.
This change means insurers now use a dynamic rate rather than a fixed rate. For example, if the RBA rate was 3% in 2023, interest would be calculated at 3% per annum, not the previous 10%.
Practical Steps for Claimants in Ashfield
If your CTP insurer delays payment, you should:
- Keep records: Document the date you submitted your claim form and any communication with the insurer.
- Request a payment schedule: Ask the insurer to provide a written timeline for when they expect to make the payment.
- Seek legal advice: If the insurer fails to pay within 28 days or refuses to calculate interest correctly, consult a solicitor.
Time Limits and Dispute Options
CTP insurers must pay benefits within 28 days of receiving a claim form. If they fail to do so, you may:
- File a complaint with the NSW Civil and Administrative Tribunal (NCAT) under the Motor Accident Injuries Act 2017.
- Take legal action to recover the overdue payment and interest.
Example Scenario
Consider a claimant in Ashfield who submitted a claim form on 1 January 2023. The insurer received the form on 5 January 2023 but paid the claim on 15 February 2023. Under the 2017 reforms, the insurer would calculate interest as follows:
- RBA cash rate on 5 January 2023: 3.25%
- Interest period: 41 days (from 5 January to 15 February)
- Interest amount: (3.25% × 41/365) × claim amount = 0.37% of the claim value
When to Seek Advice
If your insurer delays payment or disputes the interest calculation, it’s important to act quickly. Late payment interest can accumulate over time, and the 28-day deadline is strict. For personalized guidance, complete the quick, no obligation enquiry form to request contact about your circumstances.
The 2017 reforms changed how NSW CTP insurers calculate late payment interest, replacing a fixed rate with a variable rate linked to the RBA cash rate. Claimants in Ashfield should document delays, request payment schedules, and seek legal advice if necessary. Time limits and dispute options are available to ensure insurers comply with the law.