compensation fund

oxalisoxalis
edited April 2022 in PACICC.Comp

Hi,

What is the compensation fund, can you please explain a bit more? who contributes to this fund, is it all insurers in the jurisdiction regularly or it's from some tax revenue? and upon insolvency of any insurer, we can borrow money from the fund or do a separate assessment?

when we say that members of PACICC pays an assessment fee, are the fees go to the compensation fund?

Thanks

Comments

  • Staff-T1Staff-T1

    Compensation fund:

    • Contributors are all active insurers in the jurisdiction
    • The fund was established a long time ago through a one-off levy on insurers and it has been maintained since. There are no regular contributions to this fund right now.
    • Upon insolvency, the compensation fund is used to pay out claims to policyholders immediately. After that, the fund is replenished by levying (assessment fee) solvent insurers after getting recovery from the insolvent insurer's assets.
  • oxalisoxalis
    edited April 2022

    thank you!! and the assessment fee is based on the market share of each solvent insurer? are assessment fee and **assessment **the same thing?

  • Staff-T1Staff-T1

    Yes to both points

  • oxalisoxalis

    thank you so much!

  • AndrewLAndrewL

    Hello @Staff-T1, you said above that assessment fee is used to replenish compensation funds. According to Wiki, fundings are AC-3. It seems to me you imply that Assessment Fee and Contribution Fund are the same.

    Can you please clarify?

  • Staff-T1Staff-T1

    Yes, I guess AC-3 refers to how PACICC is funded. You have the original compensation fund and then when there is an insolvency, the fund gets replenished through assessments. I guess what I am trying to say is that the assessment fee goes into the compensation fund (The original one that has been drew down)

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