Claims farming involves the solicitation of individuals to make insurance claims, with the gathered information then sold to law firms or other entities for profit. This practice has been identified as a factor contributing to increased insurance premiums and undermining the integrity of insurance schemes.
The newly introduced amendments to the Motor Accident Injuries Act include penalties of up to $55,000 for engaging in claims farming activities within the state's CTP scheme. This legislation builds upon the Prohibition on Claim Farming Practices Act 2025, which was enacted earlier in April.
The Insurance Council of Australia (ICA) has welcomed this legislative move. ICA CEO Andrew Hall commended the state's leadership in protecting consumers and ensuring the long-term sustainability of the CTP scheme. He emphasized that consumers should not be subjected to aggressive or coercive tactics from unscrupulous operators seeking to generate insurance claims for their own benefit.
Mandy Young, CEO of the State Insurance Regulatory Authority, highlighted that the new bill equips authorities with the necessary tools to halt unethical operators and shield the community from misleading practices. She noted that claims farming undermines trust in the robust CTP scheme and causes real harm to consumers.
The ICA has also raised concerns about the emergence of claims farming across various insurance lines, including motor and home cover. The council previously advocated for the inclusion of CTP and workers' compensation in claims farming crackdowns, noting that Queensland's ban on the practice encompasses both areas and imposes no time limit on prosecutions.
NSW Customer Service Minister Jihad Dib described claims farming as an appalling practice with no place in the state. He stated that the amendments would strengthen laws and prevent high-pressure tactics used by claims farming networks to exploit individuals through the CTP scheme. Dib warned that anyone seeking to profit from exploiting injured individuals or their families would face serious consequences under the new legislation.
This legislative development signifies a robust stance by the NSW government to protect consumers and maintain the integrity of the CTP insurance scheme. It serves as a reminder for businesses and individuals to remain vigilant against unethical practices and underscores the importance of regulatory measures in safeguarding the interests of policyholders.
