The New South Wales government has put forward new legislation designed to restrict the practice of claim farming within the state’s compulsory third party (CTP) insurance framework. The Motor Accident Injuries Amendment (Claim Farming Practices Prohibition) Bill 2025, now before parliament, aims to prevent third parties from using aggressive tactics to encourage individuals involved in vehicle accidents to file compensation claims.
Claim farming involves individuals or entities making unsolicited contact with people affected by motor vehicle accidents, often employing persistent or coercive methods to prompt the lodging of claims. In some cases, these operators profit by passing on personal details to legal firms or other organisations. The proposed bill builds on the Prohibition on Claim Farming Practices Act 2025, which was enacted earlier this year.
Under the proposed amendments to the Motor Accident Injuries Act 2017, two new offences would be established specifically targeting claim farming in the NSW CTP Scheme. Those found to be engaging in claim farming could face penalties of up to $55,000. The legislation is intended to prevent unwanted approaches to vulnerable individuals and to maintain the operation of the CTP insurance system.
Minister for Customer Service and Digital Government, Jihad Dib, commented: “Claim farming is an appalling practice that targets people when they are at their most vulnerable, and it has no place in NSW. These amendments will strengthen our laws and stop high-pressure tactics used by claim farming networks to prey on people through the CTP Scheme. We are making it clear that anyone who seeks to profit from exploiting people with an injury or their family members will face serious consequences.”
Attorney-General Michael Daley added: “Nobody should be harassed or pressured into making a civil compensation claim. The NSW government has already acted to crack down on claim farmers targeting vulnerable people such as child abuse victim survivors. We are now extending this ban to those who would seek to exploit the injury and trauma of motor vehicle crash survivors.”
The State Insurance Regulatory Authority (SIRA) has indicated its support for the legislative changes. SIRA chief executive Mandy Young said: “Claim farming undermines trust in our robust CTP Scheme and causes real harm to people who are already dealing with the stress and trauma of a motor crash. This new bill gives us the tools to stop unethical operators and protect the community from misleading practices. Our priority is to ensure that people with an injury and their loved ones receive fair, transparent support without fear of exploitation.”
The Insurance Council of Australia (ICA) has also expressed support for the government’s decision. ICA CEO Andrew Hall commented: “No consumer should be subjected to aggressive or coercive tactics from unscrupulous operators seeking to generate insurance claims for their own benefit. The NSW government’s announcement shows strong leadership to protect consumers, while locking in the long-term sustainability of the CTP scheme. This announcement will benefit both those directly targeted by claim farmers and all motorists who pay the price for this practice in their premiums.”
Claim farming is not limited to motor insurance and is increasingly being observed in other lines, such as home insurance. The practice is seen as contributing to upward pressure on premiums and posing additional challenges for insurers and regulators. The ICA has expressed interest in working with governments across Australia to develop broader reforms that address these behaviours throughout the insurance sector.
This legislative focus on protecting consumers comes at a time when many Australians may not be fully aware of the intricacies of their own car insurance coverage. A recent survey by Youi found that while 83% of participants expressed confidence in their understanding of their insurance, only a quarter had read their Product Disclosure Statement (PDS) in full – a document outlining key policy features, coverage limits, and exclusions. Another 33% reported reading only selected sections, and 30% said they had merely glanced over it.
The research also indicated that although most drivers felt prepared to respond immediately after a collision, less than half felt assured about navigating the insurance claims process. Among those who had previously submitted a claim, almost 50% sought assistance from external sources such as family, friends, or online platforms.
