Prudential arrangements for securing liabilities
At its meeting on 12 March 2009, the Safety, Rehabilitation and Compensation Commission (SRCC) considered whether guarantees other than bank guarantees could be acceptable for securing the workers’ compensation liabilities of licensees under the Safety, Rehabilitation and Compensation Act 1988.
The SRCC considered specifically whether an insurance bond could be an acceptable alternative to a bank guarantee. The SRCC agreed that an insurance bond would be acceptable if it is provided by an insurer holding a Standards & Poor’s AA group or better issuer credit rating as well as a Standards & Poor’s AA group or better issuer financial strength rating.
The SRCC also agreed that all guarantees must be provided by institutions that are authorised and regulated by the Australian Prudential Regulatory Authority.
The manner in which a licensee arranges a guarantee for its workers’ compensation liabilities is prescribed in its Prudential Conditions of Licence.
Licensees should note that these SRCC decisions require no particular action and that current prudential arrangements are unaffected. However, a revised prudential conditions of licence and guarantee template, reflecting these decisions, will now apply to licence applications and licence extension applications.
Should a licensee seek to replace its current bank guarantee with an alternative suitable guarantee, before it is due to seek a licence extension, it will be required to apply for a variation to its present conditions of licence.
For further information please contact Mr Phillip Beaumont, Co-Director, Self Insurance Section, Comcare (phone 02 6275 0082 email phillip.beaumont@comcare.gov.au).
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