HIH rescue package announced

The Federal Government has announced a rescue package for victims of the HIH Insurance collapse which will see policyholders with outstanding claims receive all or most of what's owed to them.

The Government has also bowed to pressure and agreed to a Royal Commission to report on both the insurer’s failure as well as the regulation of the insurance industry.

The $500 million hardship package will help fund claims made by individual Australians and small businesses. Claims made by non-Australian residents and businesses with over 50 employees will not qualify for the Federal Government's rescue payments.

The NSW State Government also announced its own $600 million rescue package. This is to be partly funded by a $69 million tax imposed on the insurance companies. The likely result of this will be an increase in premiums for policyholders.

Federal Government Package

100 cents in the dollar

  • Salary continuance policies
  • Personal injury claims by individuals and small businesses
  • Claims for total loss of home
  • Claims by non-profit organizations

90 cents in the dollar

  • Other claims where family taxable income is less than $77,234 (plus $3,139 per child)
  • Other claims where family taxable income is above that threshold and the claim is more than 10% of income
  • Claims by small businesses

Dollar for dollar

  • Local government claims

Excluded

  • Claims where the insured is not an Australian citizen or permanent resident
  • Claims for reinsurance contracts issued by HIH
  • Claims covered by State Government compulsory schemes
  • Claims by businesses with more than 50 employees
  • Claims where the insured was in any way connected to the HIH collapse for example a director or officer of the insurer

State Government Package

100 cents in the dollar

  • Motor accident victims claiming against a compulsory third party policy
  • Any home owner with a claim against a building warranty policy
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