what's compensation fund

oxalisoxalis
in PACICC.Comp

Hi,

I'd like to understand a bit better about the compensation fund, who makes contribution to the fund? is it all participating insurers that have to contribute regularly to the fund in case there's insolvencies in the jurisdiction? or it's funded by some general tax revenue?

when does the individual assessment from each participating solvent insurer happen? do we collect these assessment only in a case by case scenario? i.e we only ask solvent insurers to contribute when insolvency happens and there's a shortfall between the money PACICC advanced to policyholders and the recoveries from 3rd parties + liquidating the insolvent insurers? or they make regular contributions instead?

Thank you

Comments

  • Staff-T1Staff-T1

    Hi,

    In each of the years 1998, 1999 and 2000 a special levy was made on companies to establish a Compensation Fund of approximately $30 million. This fund has never been used and it sits at around 60M right now. The purpose is to provide initial liquidity to settle policyholder liabilities rather than waiting for assessments from solvent insurers. Should this fund be used, it needs to be replenished through assessments again from solvent insurers.

    Insurers only contributed during 1998-2000 and have not contributed since. It was a one-off contribution. An assessment only happens when there is an insolvent insurer and there is not enough assets to settle all policyholder claims after liquidation :smile:

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