Under New South Wales' compulsory third party (CTP) scheme, postcodes are grouped into five geographic districts, each carrying a risk rating. Vehicles garaged in the Sydney metropolitan district are deemed highest risk of an accident, while outer metropolitan, Wollongong, Newcastle/Central Coast and "country" districts carry lower average premiums. NRMA Insurance, a trading name of Insurance Australia Limited and a separate entity from the NRMA, applied the wrong district rating to thousands of customers when they changed addresses, overcharging an estimated 41,564 motorists by about $12.17 million.
The insurer said it identified the mistake itself and reported it to the State Insurance Regulatory Authority (SIRA). "Our legacy operating system had not updated certain policies when there was a change in the customer's address, and therefore their CTP premium had not been updated," a spokesperson told the ABC. "The system issue affected certain policies across the state and wasn't tied to a particular region or suburb." The company did not reveal the period in which the mistakes occurred, but said they were identified "earlier this year".
SIRA has written to NRMA Insurance imposing a $479,500 penalty for the overcharging and seven further matters, saying it was "satisfied that NRMAI has committed contraventions of its legislative, regulatory and licensing obligations in relation to eight separate matters". The breaches include a failure to provide about $660,000 in discounts to customers between April 2024 and November 2025, and a failure between January and April last year to properly apply the risks posed by different vehicle types, which overcharged customers by $27,000 while producing $1.7 million in undercharges. The regulator also found the policies of more than 600,000 customers required further assessment due to potential errors in the calculation of other discounts.
NRMA Insurance is paying back the customers it overcharged. "Once identified, our focus was addressing the issues, apologising to those customers impacted, and providing remediation payments, with interest, as quickly as possible," the spokesperson said. The company did not say whether it disputed SIRA's determination. "We acknowledge SIRA's findings and civil penalties in relation to the issues we identified and self-reported earlier this year," the spokesperson said.
SIRA's executive director of regulatory operations, Lauren Sayer, said the agency would closely monitor NRMA Insurance to ensure all affected customers were "properly compensated". "Incorrect premiums in the NSW Compulsory Third Party Scheme can cause direct financial detriment, affect CTP affordability and sustainability, as well as undermine confidence in the fairness and integrity of the scheme," she said.
In March, SIRA imposed special licence conditions on NRMA Insurance after a series of other errors, including failure to pass on premium discounts to customers. The ABC previously reported the insurer underpaid about 400 victims of motor vehicle accidents after incorrectly calculating their weekly benefits; SIRA is still investigating that breach and has not determined a penalty.