Tasmania's compulsory third party no fault motor accident insurance premiums will remain the cheapest in Australia following a small increase in line with the Consumer Price Index (CPI) for the next year.

Motor Accidents Insurance Board Chief Executive Peter Roche said in line with actuarial advice, the MAIB Board had determined that premiums for the State's compulsory no-fault motor accident insurance would increase by 2.5 percent from 1 December 2004.

"This reflects the increase in the CPI over the past year and will result in premium increases of $8 a year for a standard motor car ($7 for pensioners), with most motor cycle premiums rising by $10 a year," Mr Roche said.

Despite these small increases, Tasmanians will still enjoy the nation's lowest premiums for a no-fault scheme and the second lowest premiums for compulsory third-party insurance.  Western Australia has lower premiums buty only offers a common law scheme.

Mr Roche said: "Under the pricing mechanism approved following the 2003 review conducted by the Government Prices Oversight Commission (GPOC), the maximum premium allowable for the next year was 4.87 percent, equivalent to the rise in average ordinary time earnings."

However, the MAIB Board considered the actuarial advice, noting the continued improvement in claim frequency, brought about by a small decrease in the number of claims alongside an increased number of vehicles on the road.

The Board opted for the lower CPI increase and this has been approved by GPOC.

Mr Roche said: "The MAIB was continuing its effort to ensure that Tasmanians enjoyed a superior and fairer range of benefits, particulary compared to benefits available under interstate schemes."

As well, the MAIB was providing $2.25 million a year to the Road Safety Task Force to fund education, promotion and enforcement programs aimed at reducing death and serious injury on the roads.

"This is an important community initiative that benefits all Tasmanians by encouraging them to drive safely," Mr Roche said.

Comparative motor car premiums inclusive of GST are: