NRMA Insurance repaid underpayments to 400 injured people — ABC News Australia

In Australia, insurer NRMA Insurance has repaid underpaid amounts and interest to about 400 people injured in motor vehicle accidents in New South Wales. Since 2019, the company had incorrectly applied indexation to certain weekly payments under the compulsory third-party (CTP) insurance scheme, ABC News Australia reports.

The error was discovered by a client’s lawyer

The breach was discovered not by the insurer or the New South Wales State Insurance Regulatory Authority (SIRA), but by a lawyer for one of the injured people, who noticed that his client’s weekly payments did not add up. NRMA Insurance initially estimated that around 700 clients had been underpaid, but later revised the estimate to 400.

The company also identified a separate group of people who, in its view, are owed interest following previously received lump-sum payments. According to the insurer, the average underpayment for each injured person was $940.

Incorrect indexation of payments

Under the CTP scheme, people who cannot work due to injuries from road accidents are entitled to income-support payments. Their amount initially equals 95% of weekly earnings before the accident and, after 14 weeks, may decrease to a maximum of 85%, depending on the person’s capacity to work. These payments must be reviewed twice a year in line with average weekly earnings.

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NRMA Insurance said it learned of a possible error in late April from a client’s legal representative. The company’s review confirmed that indexation had been applied incorrectly in its system, after which the error was corrected. The insurer said it had recently completed the process of repaying clients and paying them the interest due, and apologized.

Previous regulator concerns

This is not the first time SIRA has raised concerns about NRMA Insurance. In February 2023, the regulator sent the company a censure letter over underpayments to more than 2,000 clients. The insurer then repaid more than $735,000 to those affected but did not receive a fine. In March and June 2023, SIRA also sent the company censure letters over delays in processing and starting weekly payments.

SIRA has been investigating the current case since May and will determine its further regulatory response after completing the review. The regulator said it had required NRMA to remedy the underpayments to injured people.