NRMA Insurance's $12m blunder as drivers overcharged for green slip costs

Thousands of New South Wales motorists have been overcharged for their green slips after NRMA Insurance applied incorrect risk ratings to the locations in which vehicles were garaged.

The mistake affected an estimated 41,564 policies, and the overcharging amounted to approximately $12.17 million.

Under the state's compulsory third party (CTP) scheme, postcodes are grouped into five geographic districts, and insurers apply a risk rating to each.

Vehicles garaged in the Sydney metropolitan district are deemed highest risk of an accident, and green slip premiums are set accordingly.

Green slip premiums for vehicles garaged in the outer metropolitan, Wollongong, Newcastle/Central Coast and "country" districts are lower on average.

NRMA Insurance, a trading name of Insurance Australia Limited, applied the wrong district rating to thousands of customers when they changed addresses.

It is now facing a $479,500 penalty for that mistake and seven others.

NRMA Insurance blames old operating system

NRMA Insurance, a separate entity from the NRMA, said it had 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.

"Our new technology platform is a significant enhancement to our policy and claims system which will help to prevent similar issues happening in the future."

The company did not reveal the time period in which the mistakes occurred, but the spokesperson said they were identified "earlier this year".

The ABC previously revealed NRMA Insurance had underpaid about 400 victims of motor vehicle accidents after incorrectly calculating their weekly benefits.

SIRA has not determined a penalty for that breach because it is still investigating.

Payback time

NRMA Insurance is now paying back the thousands of 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.

SIRA's executive director of regulatory operations, Lauren Sayer, said the agency would be closely monitoring 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 its customers.

More errors identified

SIRA has written to NRMA Insurance, imposing a $479,500 penalty for the $12 million overcharging incident and a range of additional mistakes affecting CTP customers.

"[SIRA is] satisfied that NRMAI has committed contraventions of its legislative, regulatory and licensing obligations in relation to eight separate matters," the letter said.

They include a failure to provide about $660,000 in discounts to customers between April 2024 and November 2025.

Between January and April last year, a failure to properly apply the risks posed by different vehicle types resulted in customers being overcharged by $27,000.

However, SIRA determined the same error resulted in $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 they might have been owed.

NRMA Insurance 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 company spokesperson said.