General / overarching principles

Overview

The Insurers’ Guarantee Fund (IGF) provides for claims and other costs where the insurer who issued the policy of workers compensation insurance has been declared insolvent.

The IGF is established by Division 7 of Part 7 of the Workers Compensation Act 1987 (1987 Act). The IGF is under the direction, control and management of the State Insurance Regulatory Authority (SIRA).

Insolvency of an Insurer

If the Minister is satisfied that a liquidator or provisional liquidator has been appointed in respect of an insurer, or that an insurer has been dissolved, the Minister may declare the insurer to be insolvent for the purposes of Division 7 (section 226 of the 1987 Act).

Contributions to the IGF

Contributions to the IGF must be made by each insurer (other than a former licensed insurer) where SIRA determines such a contribution is necessary. Section 228 of the 1987 Act allows SIRA to determine contributions by insurers to:

• satisfy claims, judgments and awards arising from or relating to policies of insurance issued by an insolvent insurer and
• provide for any other amounts to be paid.

Access to the IGF

Access to the IGF may be provided when an insurer is declared insolvent (section 226 of the 1987 Act). The IGF allows employers or workers who would have been indemnified under a policy of workers compensation insurance issued by an insolvent insurer to continue to pursue claims, judgments or awards despite the insurer being declared insolvent. As manager of the fund, SIRA is authorised to pay the amount of any claim, judgment or award arising from or relating to any policy of insurance issued by an insolvent insurer.

SIRA currently manages IGF claims relating to liquidated insurers including HIH Insurance Group, Bishopsgate Insurance Australia Ltd, National Employers’ Mutual General Insurance Association Ltd and Rural and General Insurance Limited.

Types of claims

The IGF covers both current and future liabilities of the insolvent insurer, including claims and associated costs. This includes claims that may arise many years following the insolvency of the insurer, for example dust diseases and hearing loss.