Late Payment Interest on CTP Claims in NSW: What Changed After the 2017 Reforms
If a CTP insurer in New South Wales delays paying statutory benefits, interest may apply under the Motor Accident Injuries Act 2017 (MAIA). The 2017 reforms introduced a new framework for calculating and applying interest on late payments, replacing the previous system under the Motor Accidents Compensation Act 1999. Under the current law, interest is payable on overdue payments of treatment and care benefits, weekly income payments, and lump sum payments for non-economic loss, but only from the date the insurer was required to pay and failed to do so. The rate is set by the Act and is not subject to negotiation. The changes were designed to improve accountability and ensure claimants are not disadvantaged by delays in payment.
The Legal Framework for Late Payment Interest
The current legal basis for interest on late CTP payments is found in the Motor Accident Injuries Act 2017 and the Motor Accident Injuries Regulation 2017. Section 4.1 of the Act provides that interest must be paid on any amount that is not paid on time, including payments for treatment and care, weekly income support, and lump sum compensation for non-economic loss. The interest rate is fixed at 10 per cent per annum, calculated on a daily basis from the date the payment was due until the date it is actually made. This rate is not influenced by market conditions or the insurer’s financial position. The 2017 reforms removed the previous system, which allowed for variable interest rates and discretionary assessments, and replaced it with a transparent, automatic mechanism. The reforms also clarified that interest is not payable on payments made under a settlement or agreement unless the payment was delayed beyond the agreed date.
How SIRA Interprets the Revised Rules
The State Insurance Regulatory Authority (SIRA) interprets the revised interest rules as applying automatically when a payment is not made on time. SIRA’s guidance confirms that claimants do not need to request interest; it is payable by operation of law once the payment deadline has passed. The insurer must calculate and pay interest on overdue amounts, and must include it in any correspondence or statement of account. SIRA notes that interest is not payable on amounts that are disputed in good faith, but only on those that are not disputed or where a dispute is resolved in favour of the claimant. The authority also confirms that interest continues to accrue until the full amount is paid, including any interest on interest. This means that delays in payment can result in a compound effect on the total amount owed.
Practical Steps and Evidence That Matter
If a CTP insurer has not paid a benefit on time, claimants should first confirm the due date of the payment. This is typically the date the insurer was notified of the claim and the claim was accepted, or the date specified in a formal letter of offer. The claimant should keep a record of all communications, including emails, letters, and call logs, that show when the insurer was notified and when the payment was expected. Medical records, invoices for treatment, and proof of income loss are also essential to establish the amount of the benefit and the date it became due. Photographs of accident scenes, witness statements, and police reports may help confirm the insurer’s liability to pay. If interest is not paid, the claimant should request a written explanation from the insurer and, if necessary, lodge a formal complaint with SIRA.
Time Limits and Dispute Options
There is no time limit for claiming interest under the MAIA, but claimants should act promptly to ensure the insurer is aware of the delay and to preserve evidence. The insurer must pay interest within 28 days of the claimant notifying them of the delay, or within 28 days of the payment becoming due, whichever is later. If the insurer fails to pay interest, the claimant may apply to SIRA for a determination. SIRA can order the insurer to pay the interest, and if the insurer refuses, it may take enforcement action. In some cases, a claimant may seek a review through the Civil and Administrative Tribunal (NCAT), particularly if the insurer disputes the claim for interest. However, such reviews are not automatic and require a formal application.
Hypothetical Example: Interest on a Delayed Weekly Payment
A pedestrian was injured in a motor vehicle accident in Sydney on 15 March 2024. The CTP insurer accepted the claim on 10 April 2024 and confirmed that weekly income payments would begin on 1 May 2024. The insurer failed to pay the first weekly benefit until 12 June 2024. Under the MAIA, interest at 10 per cent per annum is payable on the overdue amount from 1 May 2024 to 12 June 2024. The claimant would be entitled to interest on the full amount of the first weekly payment, calculated daily over 42 days. The insurer is required to pay this interest, and the claimant may request a written breakdown of the calculation.
When to Seek Independent Advice
The legal framework for late payment interest is now clear under the MAIA, but claimants may still face challenges in obtaining payment. Insurers may delay or refuse to pay interest, particularly if the claim is complex or the claimant has not provided complete documentation. If a claimant believes they are entitled to interest but the insurer has not paid, they should seek advice from a qualified legal practitioner or a community legal centre. The law is not always applied uniformly, and legal advice can help ensure that rights are protected and that disputes are resolved efficiently.
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