How NSW CTP Insurers Assess Liability and Handle Late Payment Interest
A threshold injury under the Motor Accident Injuries Act 2017 (NSW) includes a soft tissue injury and a psychological or psychiatric injury that is not a recognised psychiatric illness (adjustment disorder and acute stress disorder are the usual examples; s 1.6 and Motor Accident Guidelines Part 5).
If you're dealing with a delayed payment from a NSW CTP insurer, understanding how they assess liability and calculate interest is crucial. Under the Motor Accident Injuries Act 2017, insurers must pay statutory benefits promptly, and delays can trigger penalty interest. This article explains the legal basis for late payment interest, how insurers evaluate claims, and what claimants should do if payments are delayed.
The Legal Basis for Late Payment Interest
- NSW CTP insurers are legally required to pay statutory benefits, including weekly income payments and treatment and care benefits, within 14 days of receiving a valid claim (SIRA,
- Making a motor accident claim*). If an insurer fails to meet this deadline, they may be liable for penalty interest under the
- Motor Accident Injuries Act 2017* and the
- Motor Accident Injuries Regulation 2017*. Penalty interest is calculated as 10% of the unpaid amount per year, unless the insurer can prove the delay was unavoidable.
How Insurers Assess Liability in Claims
- CTP insurers assess liability by verifying the claimant’s entitlement to statutory benefits. This includes confirming the injury meets the
- threshold injury* definition in the Motor Accident Guidelines, which requires a spinal nerve-root injury or radiculopathy. Insurers also evaluate whether the claimant’s injuries are the
- only injuries* resulting from the accident, as this affects eligibility for ongoing benefits.
For example, if a claimant suffered a soft-tissue injury (like a whiplash) that does not meet the threshold injury criteria, the insurer may limit payments to 52 weeks. However, if the injury does meet the threshold, the insurer must pay weekly benefits indefinitely. Delays in processing claims, such as failing to request medical records or misinterpreting injury severity, can lead to liability for late payment interest.
Practical Steps for Claimants
If an insurer delays payment, claimants should:
- Document the delay: Note the date the claim was submitted and when payment was received.
- Request written confirmation: Ask the insurer to confirm the reason for the delay.
- Seek clarification: If the insurer disputes liability, ask for a written explanation of their assessment.
Claimants should also ensure they provide all required evidence, such as medical records, accident reports, and income records. Insurers may reject claims if evidence is incomplete or if the claimant fails to meet specific criteria, such as the whole person impairment threshold.
Time Limits and Dispute Options
NSW CTP insurers have 14 days to pay statutory benefits after a claim is submitted. If they fail to pay within this period, penalty interest may accrue. Claimants can dispute delays by lodging a complaint with the insurer or seeking mediation through the NSW Civil and Administrative Tribunal (NCAT). In some cases, claimants may need to pursue legal action to recover unpaid interest.
When to Seek Legal Advice
If an insurer refuses to pay or disputes liability, it may be necessary to consult a solicitor. Legal advice can help claimants understand their rights under the Motor Accident Injuries Act 2017 and ensure they receive all entitled benefits. A solicitor can also assist with disputes over late payment interest or incorrect assessments of injury severity.
Next Steps
CTP insurers in NSW have specific obligations to pay statutory benefits promptly. Delays can result in liability for penalty interest, and claimants have options to challenge unpaid amounts. If you’re facing a delayed payment, it’s important to understand your rights and take action to protect your claim.
Every claim depends on its own facts. To request contact about your circumstances, complete the quick, no obligation enquiry form.