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Contents (1987 - 70)
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Workers Compensation Act 1987 No 70
Current version for 25 March 2020 to date (accessed 8 April 2020 at 19:43)
Part 7 Division 7
Division 7 Insurers’ Guarantee Fund
225   Definitions
(cf former s 30O)
(1)  In this Division—
financial year in relation to an insurer other than a self-insurer—
(a)  includes the period after 4 pm on the day preceding the first day of the financial year, and
(b)  does not include the period after 4 pm on the last day of the financial year.
insolvent insurer means an insurer to which an order of the Minister in force under section 226 relates.
insurer means a licensed insurer, a former licensed insurer or a self-insurer, but does not include an insolvent insurer.
policy of insurance issued by an insolvent insurer means—
(a)  a policy of insurance issued by an insolvent insurer, whether before or after the insurer became an insolvent insurer, or
(b)  a policy of insurance, issued by a person other than an insolvent insurer, in respect of which an insolvent insurer has (whether before or after becoming an insolvent insurer) entered into a contract or an arrangement whereby the insolvent insurer is (or would but for its dissolution be) liable to indemnify the person against liability of the person under the policy.
(2)  In this Division, a reference to a liquidator or to a provisional liquidator includes a reference to a liquidator or a provisional liquidator appointed outside New South Wales.
(3)  So far as the legislative power of Parliament permits, the liquidator of an insolvent insurer shall have and may exercise outside New South Wales the functions conferred or imposed on the liquidator by this Division, in addition to having and exercising those functions within New South Wales.
226   Insolvent insurers
(cf former s 30P)
(1)  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, by order published in the Gazette, declare that the insurer is an insolvent insurer for the purposes of this Division.
(2)    (Repealed)
227   Insurers’ Guarantee Fund
(cf former s 30Q)
(1)  There is established a fund to be known as the “Insurers’ Guarantee Fund”.
(2)  There shall be paid into the Guarantee Fund—
(a)  the contributions required by section 228 or the regulations to be paid by insurers,
(a1)  any amount directed to be paid into the Guarantee Fund out of the Insurance Fund under section 228,
(b)  all income accruing from the investment or re-investment of money in the Guarantee Fund or otherwise accruing to the Guarantee Fund,
(c)  any amounts received by the Authority in the exercise of the rights, or the discharge of the obligations, referred to in section 231 (2) or (3),
(d)    (Repealed)
(e)  any amounts payable to the Authority pursuant to section 235, and
(f)  any amounts authorised by the regulations to be paid into the Guarantee Fund from the funds of the Authority, and
(g)    (Repealed)
(3)  There shall be paid out of the Guarantee Fund such amounts as may be authorised by this Division, any other Act or the regulations to be paid out of that Fund.
(3A)    (Repealed)
(4)  The Guarantee Fund shall, subject to this Act, be under the direction, control and management of the Authority.
(5)  Subject to such directions, if any, as may be given from time to time by the Treasurer, the Authority may invest and re-invest or otherwise use or employ the Guarantee Fund in such investments as may be determined from time to time by the Authority, and any such investment may at any time be realised, hypothecated or otherwise dealt with or disposed of in whole or in part by the Authority.
228   Contributions to Guarantee Fund
(cf former s 30R)
(1)  The Authority may, in respect of any financial year prescribed by the regulations, determine the amount to be contributed to the Guarantee Fund in respect of that year, being an amount which the Authority considers is necessary—
(a)  to satisfy, during that financial year, claims, judgments and awards arising from or relating to policies of insurance issued by insurers that were, before the commencement of Schedule 3 (3) to the Workers Compensation (Benefits) Amendment Act 1991, declared under section 226 to be insolvent insurers, and
(b)  to provide for the payment of any other amounts to be paid under this Division from the Guarantee Fund during that financial year which directly or indirectly relate to insurers that were, before that commencement, declared under that section to be insolvent.
(2)  Where the Authority determines an amount under subsection (1) in respect of a financial year prescribed for the purposes of that subsection, each insurer (other than a former licensed insurer) shall pay to the Authority for payment into the Guarantee Fund an appropriate contribution calculated in accordance with the following formula—
 
where—
A is the amount which the insurer is required by or under this Act to contribute to the Workers Compensation Operational Fund in respect of that financial year,
B is the total amount required by or under this Act to be contributed by all insurers (other than former licensed insurers) to the Workers Compensation Operational Fund in respect of that financial year, and
C is the amount determined pursuant to subsection (1) in respect of that financial year.
(2A)  The Authority may, in respect of any financial year specified by the regulations, determine the amount to be contributed to the Guarantee Fund in respect of that year, being an amount which the Authority considers is necessary—
(a)  to satisfy, during that financial year, claims, judgments and awards arising from or relating to policies of insurance issued by insurers that were, after the commencement of Schedule 3 (3) to the Workers Compensation (Benefits) Amendment Act 1991, declared under section 226 to be insolvent insurers, and
(b)  to provide for the payment of any other amounts to be paid under this Division from the Guarantee Fund during that financial year (not being amounts which directly or indirectly relate to insurers that were, before that commencement, declared under that section to be insolvent insurers).
(2B)  Where the Authority determines an amount under subsection (2A) in respect of a financial year prescribed for the purposes of that subsection, each insurer (other than a self-insurer or a former licensed insurer) shall pay to the Authority for payment into the Guarantee Fund an appropriate contribution calculated in accordance with the following formula—
 
where—
A is the amount which the insurer is required by or under this Act to contribute to the Workers Compensation Operational Fund in respect of that financial year,
B is the total amount required by or under this Act to be contributed by all insurers (other than self-insurers and former licensed insurers) to the Workers Compensation Operational Fund in respect of that financial year,
C is the amount determined pursuant to subsection (2A) in respect of that financial year.
(2C)  Where the Authority so directs, the amount determined by the Authority under subsection (1) or (2A) is to be paid into the Guarantee Fund out of the Insurance Fund, instead of being paid by insurers under subsection (2) or (2B).
(3)  A contribution is payable at such times and in respect of such periods as may be prescribed.
(4)  If a contribution is not paid within the time specified by the Authority in a notice to an insurer requiring the insurer to pay the contribution—
(a)  the insurer is guilty of an offence and liable to a penalty not exceeding 100 penalty units, and
(b)  the contribution, together with a late payment fee calculated at the rate of 15 per cent of the contribution per annum compounded quarterly (or, where another rate is prescribed, that other rate), may be recovered by the Authority as a debt in any court of competent jurisdiction.
(5)  In any proceedings under this section, a certificate executed by the Authority as to the amount of the appropriate contribution payable, under this section, by the insurer, and as to the time within which the contribution was required to be paid, is (without proof of its execution by the Authority) admissible in any proceedings and is evidence of the facts stated in the certificate.
229   Liquidator to notify Authority of claims
(cf former s 30S)
The liquidator of an insolvent insurer shall, on receiving any claim relating to any policy of insurance issued by the insolvent insurer, forward the claim to the Authority.
Maximum penalty—20 penalty units.
230   Delivery of documents etc to Authority
(cf former s 30T)
The liquidator of an insolvent insurer shall, whenever requested to do so by the Authority—
(a)  deliver to the Authority all documents relating to policies of insurance issued by the insolvent insurer and all claims, judgments or awards made in respect of any such policies in the liquidator’s possession, and
(b)  supply to the Authority all information in the liquidator’s possession relating to any such policies or any such claims, judgments or awards.
Maximum penalty—20 penalty units.
231   Appointment of Authority as agent and attorney of employer and worker
(cf former s 30U)
(1)  The Authority is by this section appointed the agent and attorney of an employer and a worker insured under a policy of insurance issued by an insolvent insurer.
(2)  As agent and attorney of such an employer, the Authority may exercise the rights and discharge the obligations of the employer—
(a)  for the purpose of dealing with and finalising any claim against which the employer is indemnified under the policy of insurance,
(b)  for the purpose of satisfying any such claim or any judgment or award against which the employer is indemnified under the policy of insurance, and
(c)  for any other purpose prescribed by the regulations.
(3)  As agent and attorney of such an employer or a worker, the Authority may exercise the rights of the employer or worker in connection with the policy of insurance—
(a)  for the purpose of proving in the winding up of the insolvent insurer and receiving any dividends or other money payable to the employer or worker in the winding up,
(b)  for the purpose of recovering any money which the employer or worker is entitled to recover under section 151Z of this Act or section 64 of the former Act,
(c)  for the purpose of recovering any money which the employer or worker is entitled under the policy of insurance to recover from the person who issued the policy, being a policy referred to in paragraph (b) of the definition of policy of insurance issued by an insolvent insurer in section 225, and
(d)  for any other purpose prescribed by the regulations.
(4)  The Authority may exercise rights and discharge obligations as agent in the name of the employer or worker concerned, or in its own name.
(5)  All rights vested in an insurer or insolvent insurer and all obligations imposed on an insurer or insolvent insurer, being rights or obligations—
(a)  arising from or relating to a policy of insurance issued by an insolvent insurer to an employer, and
(b)  which may or shall be exercised or discharged for the purpose of—
(i)  dealing with and finalising any claim against which the employer is indemnified under the policy, or
(ii)  satisfying any claim, judgment or award, against which the employer is indemnified under the policy,
are vested in or imposed on the employer.
(6)  Subsection (5) shall not be construed so as to vest in or impose on an employer, or to affect in any other way—
(a)  a right of an insurer or insolvent insurer to be indemnified by a reinsurer or an obligation of an insurer or insolvent insurer to indemnify an employer, or
(b)  any other prescribed right or obligation.
(7)  If the Authority is, under this section, empowered to exercise any rights, or to discharge any obligations, of an employer or a worker as agent and attorney, the employer or worker is not entitled, without the consent of the Authority, to exercise those rights or discharge those obligations.
(8)  The appointment effected by this section may be revoked only by an Act.
232   Payments to employer or liquidator
(cf former s 30V)
(1)  Where an employer insured under a policy of insurance issued by an insolvent insurer has satisfied (whether before or after the insurer became an insolvent insurer for the purposes of this Division or before or after the commencement of this Division) any claim, judgment or award in respect of which the employer has not been indemnified under that policy, the Authority, as manager of the Guarantee Fund, may pay from the Guarantee Fund to the employer an amount equal to the whole or any part of the amount paid by the employer in satisfaction of the claim, judgment or award.
(2)  Where the liquidator of an insolvent insurer has satisfied (whether before or after the insurer became an insolvent insurer for the purposes of this Division or before or after the commencement of this Division) any claim, judgment or award in respect of which an employer is entitled to be indemnified under a policy of insurance issued by the insolvent insurer, the Authority, as manager of the Guarantee Fund, may pay from the Guarantee Fund to the liquidator an amount equal to the whole or any part of the amount paid by the liquidator in satisfaction of the claim, judgment or award.
(3)  Where—
(a)  a payment is made under subsection (1) to an employer in respect of a claim, judgment or award, the Authority shall be deemed, to the extent of the payment, to have satisfied the claim, judgment or award as agent and attorney of the employer, or
(b)  a payment is made under subsection (2) to the liquidator of an insolvent insurer in respect of a claim by or on behalf of any person or a judgment or award for the benefit of any person, the Authority shall be deemed, to the extent of the payment, to have satisfied the claim, judgment or award as agent and attorney of the employer of the person in respect of whom the payment is made.
(4)  The powers conferred by subsections (1) and (2) are exercisable at the absolute discretion of the Authority and neither those subsections operate nor the exercise of any of those powers operates so as to confer, directly or indirectly, any right on any person to whom a payment is or may be made under those subsections or on any other person.
233   (Repealed)
234   Application of Guarantee Fund
(cf former s 30X)
(1)  Out of the Guarantee Fund, the Authority as manager of that Fund—
(a)  shall pay the amount of any claim, judgment or award arising from or relating to any policy of insurance issued by an insolvent insurer, being a claim, judgment or award that it proposes to satisfy as agent and attorney of an employer, and any other amounts required by this Division to be paid from that Fund, and
(b)  is entitled—
(i)  to be paid the costs of administration of the Guarantee Fund (including any legal or other costs connected with the declaration of an insurer as an insolvent insurer), and
(ii)  to be indemnified against all payments made by it and all costs and expenses that it may incur in or in connection with the exercise of its functions under this Division.
(2)  Where a payment is made by the Authority as agent and attorney of an employer, being a payment authorised by this Division, the Authority shall not be entitled to recover the amount of that payment from the employer.
235   Recovery of amounts under contracts or arrangements for reinsurance
(cf former s 30Y)
To the extent that any amounts are paid out of the Guarantee Fund in respect of a claim, judgment or award pursuant to section 234 (including the costs of the Authority), the Authority shall, where an insolvent insurer (if it had provided indemnity to that extent under a policy of insurance) would have been entitled to recover any sum under a contract or arrangement for reinsurance, be entitled to the benefit of and may exercise the rights and powers of the insolvent insurer under that contract or arrangement so as to enable the Authority to recover from the reinsurer and pay into the Guarantee Fund the amount due under that contract or arrangement.
236   Payments of workers compensation when insolvent insurer dissolved
(cf former s 30Z)
(1)  When an insolvent insurer has been dissolved, the payments of compensation under judgments or awards relating to policies of insurance issued by the insolvent insurer which would, but for the dissolution taking place, be payable by the insolvent insurer shall continue and be paid out of the Guarantee Fund by the Authority.
(2)  When an insolvent insurer has been dissolved, a person who would have had, but for the dissolution of the insolvent insurer, an entitlement to payment of any amount arising from or relating to any policy of insurance issued by the insolvent insurer (being a policy in respect of which the insolvent insurer is the insurer) shall be entitled to payment of that amount out of the Guarantee Fund.
(3)  A person referred to in subsection (2) may make a claim against the Authority, as manager of the Guarantee Fund, in respect of an entitlement to payment of an amount under that subsection.
(4)  The Authority, as manager of the Guarantee Fund, is entitled to deal with and finalise a claim made under subsection (3) in relation to a policy of insurance issued by an insolvent insurer to the same extent as it would have been entitled to do so if the insolvent insurer had not been dissolved.
237   Inspection of documents etc by person authorised by Minister
(cf former s 30ZA)
The liquidator of an insolvent insurer shall, whenever requested to do so by a person authorised by the Minister, make any documents relating to policies of insurance issued by the insolvent insurer and any claims, judgments or awards made in respect of any such policies in the liquidator’s possession available for inspection by that person.
Maximum penalty—20 penalty units.
238   Authority may take certain legal proceedings
(cf former s 30ZB)
(1)  If—
(a)  the liquidator of an insolvent insurer applies to any court for directions in relation to any particular matter arising under the winding up,
(b)  the exercise by the liquidator of an insolvent insurer of any of the liquidator’s functions, whether under this Division or not, is challenged, reviewed or called into question in proceedings before any court, or
(c)  any other matter that concerns or may affect the operation of this Division is raised in proceedings before any court,
the Authority may intervene at any stage of the proceedings before that court, by counsel, solicitor or agent, and shall thereupon become a party to, and shall have all the rights of a party to, those proceedings before that court, including the right to appeal against any order, judgment or direction of the court.
(2)  In any case in which the Attorney General might take proceedings on the relation or on behalf or for the benefit of a person who is (or who would but for the dissolution of the insolvent insurer be) entitled, under a policy of insurance issued by an insolvent insurer, to be indemnified against a claim, judgment or award arising from or relating to the policy, being proceedings for or with respect to enforcing or securing the observance of any provision made by or under this Division, any Act or any rule of law, the Authority shall be deemed to represent sufficiently the interests of the public and may take the proceedings in its own name.
(3)  The Authority is entitled to be paid, out of the Guarantee Fund, all the costs and expenses incurred by the Authority in exercising the powers conferred by this section.
239   Regulations
(cf former s 30ZC)
The regulations may make provision for or with respect to—
(a)  requiring insurers (including former licensed insurers) to make contributions or further contributions to the Guarantee Fund,
(b)  the manner and method of determining any such contributions or further contributions,
(c)  varying in specified circumstances the periods with respect to which contributions are to be determined, or the method by which contributions are to be calculated, under section 228,
(d)  the payment, and proceedings for the recovery, of contributions, and
(e)  the circumstances and the manner in which contributions of insurers and other amounts standing to the credit of the Guarantee Fund may be repaid and otherwise distributed to insurers and the liquidators of insolvent insurers.