When CTP Insurers Must Pay and Interest Applies
Under the Motor Accident Injuries Act 2017, CTP insurers in New South Wales are required to pay statutory benefits within a set timeframe. If an insurer fails to pay a benefit that is due, interest may apply under the Act. This interest is not discretionary, it is a statutory right for claimants who have been delayed in receiving payments they are entitled to. The law provides that interest begins to accrue from the date the insurer should have paid the benefit, not from the date the claim was made or the payment was requested.
The primary benefits subject to late payment interest include weekly income payments, treatment and care benefits, and lump sum payments for permanent impairment. The rate of interest is set by law and is not negotiated between the claimant and insurer. It is calculated at the prescribed rate under the Motor Accident Injuries Regulation 2017, which currently aligns with the Reserve Bank of Australia’s official cash rate, adjusted annually.
Statutory Time Limits for CTP Payments
There is no fixed statutory deadline for CTP insurers to make a payment after a claim is accepted. However, the law requires that payments be made as soon as practicable after the insurer has determined the claim is valid and the benefit is due. Delays beyond what is reasonable under the circumstances may trigger the right to interest.
The Motor Accident Injuries Act 2017 does not specify a maximum number of days for payment, but it does require insurers to act promptly. If an insurer delays payment without reasonable cause, the claimant may be entitled to interest on the overdue amount. The onus is on the claimant to demonstrate that the delay was not justified and that the insurer failed to act within a reasonable timeframe.
How Interest Is Calculated and Applied
Interest on late CTP payments is calculated from the date the payment was due until the date it is actually made. The rate is determined by regulation and is reviewed annually. As of 2026, the interest rate is 4.5% per annum, applied on a daily basis to the outstanding amount. This rate is applied to all types of benefits, including weekly payments, lump sum payments, and treatment and care benefits.
Interest is not limited to a single benefit type. If multiple payments are delayed, interest accrues on each individual overdue amount from its respective due date. The claimant does not need to apply for interest, it is automatically payable under the law if the insurer fails to pay on time. However, the claimant must keep records of all payments made and any correspondence regarding delays to support a claim for interest.
What to Do If a CTP Insurer Delays Payment
If a CTP insurer delays payment, the claimant should first confirm the payment was due and that the insurer has not provided a valid reason for the delay. The claimant should review the insurer’s correspondence and any letters confirming the approval of benefits. If the insurer has not responded within a reasonable timeframe, typically 14 to 21 days after approval, the claimant may begin to accrue interest.
The claimant should keep a record of all communications with the insurer, including emails, letters, and call logs. They should also retain copies of payment approvals, medical reports, and any documentation showing the date the benefit was due. These records may be needed if the claimant seeks to recover interest through a formal dispute or application.
Disputing Late Payments and Seeking Interest
If an insurer continues to delay payment after a reasonable period, the claimant may dispute the delay through the formal process administered by the State Insurance Regulatory Authority (SIRA). SIRA provides a dispute resolution pathway for claimants who believe they are entitled to interest on late payments. The claimant must submit a written dispute to SIRA, including evidence of the due date, the amount owed, and the date the payment was made.
SIRA may assess the delay and determine whether interest is payable. If SIRA finds that the insurer delayed without reasonable cause, it can order the insurer to pay the interest. The claimant is not required to go to court to claim interest, SIRA’s dispute process is the primary mechanism for resolving such matters.
Common Misunderstandings About Late Payment Interest
A common misunderstanding is that interest only applies if the insurer is at fault. This is not correct. Under the Motor Accident Injuries Act 2017, interest on late payments is a statutory right, not a fault-based entitlement. It applies regardless of whether the claimant was at fault, contributed to the accident, or was a pedestrian or cyclist.
Another misunderstanding is that interest only applies to lump sum payments. This is incorrect. Interest applies to all forms of statutory benefits, including weekly payments, treatment and care benefits, and lump sum payments for permanent impairment.
A third misconception is that interest is capped at a certain amount. There is no statutory cap on the total interest that can be recovered. Interest continues to accrue daily until the payment is made, and the claimant is entitled to the full amount owed.
Hypothetical Example: Delayed Weekly Income Payment
A claimant was injured in a motor accident on 15 March 2026. The insurer approved weekly income payments on 10 April 2026, and the first payment was due on 17 April 2026. However, the insurer did not issue the payment until 20 May 2026. The claimant was entitled to interest on the overdue amount from 17 April 2026 to 20 May 2026.
The interest was calculated at 4.5% per annum, applied daily. The claimant retained a copy of the approval letter and the payment receipt. They submitted a dispute to SIRA, which confirmed the delay was not justified and ordered the insurer to pay the interest. The claimant received the interest within 60 days of the SIRA decision.
When to Seek Legal Advice
While claimants can pursue interest on late payments through SIRA’s dispute process, complex cases may require independent advice. This is particularly true if the insurer disputes the due date, claims the delay was justified, or refuses to pay interest despite a valid claim.
Legal advice may also be needed if the claimant has not received any communication from the insurer, or if the insurer has failed to acknowledge a claim for an extended period. In such cases, a formal application to SIRA may be necessary to establish the claim and secure entitlement to interest.
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