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Employee Protection (Employee Entitlements Guarantee) Bill 2005

Part 4 Approved insurers

Division 1 Approved insurer agree me nt

16   Meaning of approved insurer

             (1)  An approved insurer is an insurer that enters into an agreement with the Commissioner under which the insurer:

                     (a)  undertakes to accept all applications for policies of employee entitlements protection insurance at a rate of premium not exceeding limits fixed by the Commissioner for the purposes of this section; and

                     (b)  undertakes to contribute to the costs of the nominal insurer as required by the Commissioner under this Part; and

                     (c)  undertakes to make contributions under the bad risk cross-subsidisation scheme as required by the Commissioner under this Part; and

                     (d)  is entitled to payments under the bad risk cross-subsidisation scheme on the basis fixed in the scheme.

             (2)  The agreement with the approved insurer is also to provide for a scheme for the conciliation of disputed claims under policies of employee entitlements protection insurance.

17   Withdrawal from scheme

             (1)  An insurer may withdraw from the agreement with the Commissioner by giving written notice of withdrawal.

             (2)  The withdrawal takes effect, on a date fixed in the notice, which must be at least one year after the date the notice is given.

             (3)  When the withdrawal takes effect, the insurer ceases to be an approved insurer.

             (4)  After giving notice of withdrawal, an insurer must not issue any further policies of employee entitlements protection insurance.

Penalty:  150 penalty units.

Division 2 The nominal insurer sche me

18   The Commissioner to be nominal insurer

                   The Commissioner is to be regarded as the insurer under a policy of employee entitlements protection insurance (the nominal insurer ) of employees of an employer who:

                     (a)  is exempt from insurance under this Act; or

                     (b)  fails to hold a policy of employee entitlements protection insurance for the benefit of the employer's workforce as required under this Act.

19   Approved insurers to contribute to costs of claims against nominal insurer   

             (1)  An approved insurer must contribute towards the nominal insurer's costs on a basis determined by the Commissioner.

             (2)  The basis of contribution must:

                     (a)  be fair and equitable as between approved insurers; and

                     (b)  ensure as far as practicable and subject to any adjustments that the Commissioner considers fair and equitable in a particular case that the ratio between:

                              (i)  an insurer's premium income, or estimated premium income, from policies of wage protection insurance; and

                             (ii)  the insurer's contributions to the nominal insurer's costs;

                            is approximately the same for each approved insurer.

 

Division 3 Bad risk cross-subsidisation sche me

20   Establishment of scheme

                     (1)  The Commissioner may establish a scheme (the bad risk cross-subsidisation scheme ) under which the costs of insuring against bad risks are fairly apportioned between all approved insurers.

                     (2)  An insurer is taken to have insured against a bad risk if:

                             (a)  the employer becomes insolvent within 1 year after taking out a policy of employee entitlements protection insurance; or

                             (b)  the risk of a claim under a policy of employee entitlements protection insurance is classified by the Commissioner as a bad risk under criteria determined by the Commissioner.

21   Contributions to scheme

                     (1)  An approved insurer must make contributions for the purposes of the bad risk cross-subsidisation scheme on a basis determined by the Commissioner.

                     (2)  The basis of contribution must:

                            (a)    be fair and equitable as between approved insurers; and

(b)   must ensure as far as practicable and subject to any adjustments that the Commissioner considers fair and equitable in a particular case that the ratio between:

                              (i)  an insurer's premium income, or estimated premium income, from policies of employee entitlements protection insurance; and



                             (ii)  the insurer's contributions to the bad risk cross-subsidisation scheme;

                            is approximately the same for each approved insurer.

22   Entitlements under scheme

                   An approved insurer that incurs costs in relation to bad risks is entitled to be indemnified against those costs under the bad risk cross-subsidisation scheme to the extent fixed under the scheme.