What is claim farming?
Claim farming refers to the practice of third parties, often operating as intermediaries, making unsolicited contact with members of the public to identify potential compensation claims. This contact can occur through phone calls, social media messages, text messages, or in person. The approach is typically aggressive or misleading, with the aim of persuading individuals, or their family members, to lodge a claim following a motor vehicle accident.
The ‘claim farmer’ profits selling the person’s personal information or otherwise being paid for referrals.
In the context of the Compulsory Third Party (CTP) scheme, claim farming can take more opportunistic forms. Examples include representatives attending accident scenes to collect personal details or using targeted online advertising.
Claim farming practices are particularly problematic because they exploit vulnerable individuals, create networks of providers who profit from referrals rather than genuine service delivery, and inflate claims costs - which ultimately drives up premiums for motorists. These behaviours undermine the integrity of the CTP scheme and highlight the need for strong legislative intervention.
As noted in the Second Reading Speech for the Motor Accident Injuries Amendment (Claim Farming Practices Prohibition) Bill 2025, Minister Jihad Dib described these practices as ‘predatory and exploitative’, stating they ‘erode trust in the CTP scheme and inflate costs’. He explained that the Bill aims to ‘close loopholes and respond to networks of providers engaging in prohibited referrals’, ensuring protections extend beyond legal practitioners to all service providers.
New reforms targeting claim farming in CTP insurance
In April 2025 the Claim Farming Practices Prohibition Act 2025 (NSW) came into force, prohibiting the solicitation, buying or selling of personal injury claims. However, these reforms did not extend to motor vehicle accidents (see our recent insight Claim Farming is now prohibited in NSW).
In order to plug this gap, and address matters specific to the CTP scheme, on 19 November 2025 the Motor Accident Injuries Amendment (Claim Farming Practices Prohibition) Bill 2025 was introduced into Parliament. The Bill seeks to amend the current Motor Accident Injuries Act 2017 (NSW), introducing three new offences punishable by up to 500 penalty units (currently $55,000):
- Soliciting or referring for consideration: It is an offence to contact a person to solicit them to make a claim, or refer them to a third party to provide services in relation to a claim, where the person making the contact receives consideration for that contact.
- Requesting another to solicit: It is an offence to ask someone else to make that contact.
- Trading referrals for consideration: It is an offence to receive consideration, or to provide consideration, for a referral.
This expansion means that such offences now apply to all persons, not just legal practitioners, who already had a duty not to give or receive consideration for claims pursuant to Clause 41 of the Motor Accident Injuries Regulation 2017 (to be repealed).
In the Second Reading Speech, Minister Jihad Dib explained that the purpose of this ‘is to respond to the risks posed by all types of service providers engaging in prohibited referrals ... It also responds to networks of providers who engage in this behaviour that was not previously captured’.
Further amendments have been proposed to the Legal Profession Uniform Law Application Act 2014 to provide that, if the proposed claim farming prohibitions are contravened by a lawyer or legal practice:
- Legal costs will not be recoverable by the lawyer or legal practice in relation to the claim, and
- The contravention may constitute unsatisfactory professional conduct and professional misconduct by the lawyer.
Implications for you
The introduction of these prohibitions is expected to reduce unmeritorious claims, which have historically driven up scheme costs. By targeting the financial incentives behind claim farming, the reforms aim to improve the integrity of the CTP scheme and stabilise premiums over time.
For insurers and service providers operating within the NSW CTP framework, key implications include:
- Reduced exposure to unethical referral networks: The Bill closes loopholes that previously allowed non-legal actors to profit from referrals, limiting the flow of questionable claims into the system.
- Greater scrutiny of compliance practices: Providers should review their internal processes to ensure no involvement in prohibited referral arrangements.
- Potential enforcement action and significant penalties: If NSW follows Queensland’s lead, prosecutions are likely. Queensland introduced similar legislation in December 2019, which led to the state’s first claim farming conviction in February 2023, when the Brisbane Magistrates Court imposed fines totalling $1 million against one agency for 94 offences.
The proposed reforms mark a significant shift in how claim farming will be addressed within the NSW CTP scheme. By closing legislative gaps and introducing clear offences with substantial penalties, the Bill sends a strong message that unethical referral practices will not be tolerated.
For insurers and service providers, this is not just a compliance issue - it’s an opportunity to reinforce best practices, protect genuine claimants, and maintain the integrity of the scheme.
Ultimately, these changes aim to create a fairer, more sustainable CTP environment for motorists and insurers alike.
Motor Accident Injuries Amendment (Claim Farming Practices Prohibition) Bill 2025
Claim Farming Practices Prohibition Act 2025
