What Changed in NSW CTP Lump Sum Settlements After 2017
The 2017 reforms to New South Wales’ Compulsory Third Party (CTP) motor accident compensation scheme changed how lump sum settlements are offered to injured people. These changes, made under the Motor Accident Injuries Act 2017, focus on the long-term impact of injuries rather than just the type of injury. For people in Armidale and across NSW, this means settlement offers now reflect the full effect of an injury on daily life, including ongoing pain, loss of function, and future financial impact.
How Lump Sum Settlements Are Calculated Now
Under the current system, lump sum payments are not based on a fixed formula. Instead, they are determined by a person’s whole person impairment (WPI), which measures the lasting impact of injuries on physical, mental and social function. The WPI is assessed by a medical practitioner using the Australian National Standards for the Assessment of Whole Person Impairment.
The base amount for a lump sum is calculated by multiplying the WPI percentage by a maximum value set by SIRA. This value is adjusted for factors such as age, occupation, and the permanence of the injury. For example, a younger person with a permanent injury affecting their ability to work may receive a higher settlement than an older person with a temporary condition.
What Injuries Qualify for a Settlement
A lump sum settlement may be offered if the injury results in a WPI of 10% or more. This includes injuries that are classified as soft tissue or threshold injuries under the Motor Accident Injuries Act 2017. A soft tissue injury is defined as an injury to muscles, ligaments, or tendons, or to the spine, that causes pain, stiffness, or loss of movement. The law specifies that a spinal nerve-root injury producing neurological signs other than radiculopathy may still count as a soft tissue injury.
If a person’s only injuries are threshold injuries, weekly benefits and treatment and care benefits generally cease after 52 weeks from the date of the accident. This is because the law limits these benefits to cases where the injury does not meet the threshold for damages. The 52-week limit applies only to people whose only injuries are threshold injuries.
What Insurers Must Include in a Settlement Offer
Insurers must provide a written explanation of how they calculated the lump sum. This must include:
- The WPI percentage and the medical evidence used to determine it
- How the base amount was adjusted for age, occupation, and future impact
- A breakdown of any separate payments for pain and suffering, future medical costs, or loss of income
Claimants should review this information carefully. Discrepancies between the WPI assessment and medical records may indicate an underpayment. Insurers are required to provide this information to help claimants understand whether the offer is fair.
Evidence That Supports a Lump Sum Claim
To support a settlement claim, a person must provide:
- Medical reports from treating doctors, physiotherapists, and psychologists that detail the injury and its impact on daily life
- A formal WPI assessment from a qualified medical practitioner
- Proof of lost income, out-of-pocket medical expenses, and other costs related to the injury
- Accident details such as a police report, witness statements, or photographs of the scene
These records help ensure the settlement reflects the actual impact of the injury. Without them, the insurer may not be able to assess the claim accurately.
What to Do If You Disagree With a Settlement Offer
If you believe your settlement offer is too low, you can request a review from the insurer. You must provide written reasons and any additional evidence, such as a second medical opinion.
If the insurer refuses to reconsider, you may apply to the NSW Civil and Administrative Tribunal (NCAT) for a review. NCAT has the power to assess the WPI, review the insurer’s calculation, and determine a fair lump sum. This process is separate from a common law damages claim and does not require proof of fault.
When to Seek Help
The 2017 reforms made the settlement process more complex, especially for people with long-term or serious injuries. A legal professional can help you:
- Understand the WPI assessment and challenge any inaccuracies
- Negotiate with the insurer to secure a fair settlement
- Prepare and submit a claim to NCAT if necessary
Every claim depends on its own facts. To request contact about your circumstances, complete the quick, no obligation enquiry form.