Insurance policy holders covered
In the unlikely event that a general insurer fails and the Financial Claims Scheme (FCS) is activated by the Australian Government, most general insurance policyholders – including medium and large businesses – will be covered under the FCS for valid claims up to $5,000. Other persons or third parties may also be able to claim under certain eligible policies with the affected insurer under the FCS. There are some policies that are excluded - see the General insurer FAQs.
In addition, the following policyholders with a general insurer will be covered under the FCS for valid claims of $5,000 and above:
- individuals who are Australian citizens or permanent residents
- non-resident individuals who have insured against risks located in Australia
- Australian-based small businesses, as defined under the Income Tax Assessment Act 1997
- Australian-based not-for-profit organisations
- trustees of Australian-based family trusts
If they are eligible, APRA will determine through a claims assessment process the validity of each claim and the amount payable to eligible policyholders and claimants. In most cases, the amount paid will be the full amount that the policyholder or claimant would have been entitled to under the insurance policy, assuming the claim is valid and the amount claimed is justified.
The FCS may also have the effect of extending insurance cover for protected policies for a period up to 28 days after the FCS has been activated even if the policy is cancelled or ends within that time.
In most cases, a claim can only be made against a failed insurer under the FCS if the insurance policy under which the claim is made is issued by that insurer.
The FCS does not apply to policies issued by life insurance companies or private health insurers (although private health insurance policyholders may be protected separately under the Private Health Insurance (Collapsed Insurer Levy) Act 2003.)
You can find a list of general insurers that are licensed (or authorised) by APRA and covered under the FCS here.