Federal Court of Australia

Insurance Australia Limited, in the matter of Insurance Australia Limited [2025] FCA 1044

ORDERS

THE COURT ORDERS THAT:

Dispensation

1.    In relation to the proposed transfer of part of the insurance business of the First Applicant to the Second Applicant (the Scheme), the need for the Applicants to comply with s 17C(2)(c) of the Insurance Act 1973 (Cth) (the Act) is dispensed with pursuant to s 17C(5) of the Act, provided the First Applicant complies with Orders 2 to 9 below.

Notification

Email and postal notification

2.    The First Applicant send a summary of the Scheme approved by the Australian Prudential Regulation Authority (APRA) (the Scheme Summary):

(a)    in respect of active Transferring Policies which are issued by the First Applicant directly or via authorised representatives, by letter sent electronically or by post to those policyholders whose contact details are held by the First Applicant in connection with its policy administration functions;

(b)    in respect of active Transferring Policies which are issued by the First Applicant via a broker or underwriting agency, by an electronic letter delivered to the broker or underwriting agency, enclosing policyholder communications substantially in the form at Tab 13 to Exhibit CM-1 to the affidavit of Christa Marjoribanks;

(c)    in respect of Transferring Policies upon which there is an open claim (and is not otherwise an active Transferring Policy), directly by email or post to the policyholder or enclosed within an electronic letter substantially in the form at Tab 13 to Exhibit CM-1 to the affidavit of Christa Marjoribanks to their relevant broker or underwriting agency, as applicable; and

(d)    in respect of Transferring Policies upon which there is a possibility of latent claims, by post or electronic mail to:

(i)    the corporate office of solicitors who are known to represent claimants relating to molestation, asbestos and silicosis and home warranty claims and are referred to in the affidavit of Christa Marjoribanks; and

(ii)    key institutions and bodies that may be in contact with policyholders involved with molestation and home warranty claims and who are referred to in the affidavit of Christa Marjoribanks.

On request

3.    On request by a policyholder from on or about the date the Notice of Intention is published in The Age until the date of the confirmation hearing, the First Applicant provide as soon as reasonably practicable the Scheme Summary to policyholders free of charge.

Notice of intention

4.    The First Applicant publish the notice of intention to make an application to the Court for confirmation of the Scheme approved by APRA (Notice of Intention) in the following newspapers:

(a)    The Age;

(b)    The Australian;

(c)    Sydney Morning Herald;

(d)    Courier Mail;

(e)    The Advertiser;

(f)    The West Australian;

(g)    NT News;

(h)    The Canberra Times; and

(i)    The Mercury,

(together, Newspapers).

5.    The First Applicant publish the Notice of Intention in the Commonwealth Government Notices Gazette on or about the date the Notice of Intention is published in The Age.

Webpage

6.    From the date the Notice of Intention is published in The Age up to and including the date of the confirmation hearing, the First Applicant make the following documents available:

(a)    the Scheme document;

(b)    the Scheme Summary;

(c)    the Notice of Intention;

(d)    the actuarial reports of Mr Kaise Stephan of Deloitte Actuaries dated 31 March 2025 and 26 May 2025;

(e)    the actuarial reports of Ms Lisa Simpson of PricewaterhouseCoopers dated 5 June 2025; and

(f)    the actuarial report of Mr Brett Ward, appointed actuary of the First Applicant, dated 5 June 2025.

(together, the Scheme Documents), on the webpage https://www.iag.com.au/cgua-licence, which is also accessible from the following webpages:

(a)    www.iag.com.au;

(b)    www.cgu.com.au; and

(c)    www.wfi.com.au.

Public inspection

7.    The First Applicant make copies of the Scheme Documents available for public inspection from 9:00 am to 5:00 pm on weekdays for a period of at least 15 business days (Public Inspection Period) at the locations approved by APRA as notified in the Notice of Intention.

Social media

8.    On or about the date the Notice of Intention is published in The Age, the First Applicant advertise the Scheme until the last day of the Public Inspection Period on:

(a)    Facebook for WFI; and

(b)    LinkedIn for CGU,

in the form at Tab 13 to Exhibit CM-1 to the affidavit of Christa Marjoribanks.

Call centre and email contact address

9.    From, or shortly after the date the Notice of Intention is published in The Age and up to and including the date of the confirmation hearing, the First Applicant will:

(a)    use its existing call centres to receive and monitor calls about the Scheme made to the toll-free number in Australia specified in the Notice of Intention and Scheme Summary; and

(b)    operate and monitor the email address specified in the Notice of Intention and Scheme Summary.

Other orders

10.    The confirmation hearing of the Scheme be listed at 10:00 am AEST on 1 September 2025 at the Law Courts Building, 184 Phillip St, Queens Square, Sydney NSW 2000.

11.    The Applicants pay the costs of APRA of the proceedings to date as agreed or, if agreement cannot be reached, as assessed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

DERRINGTON J:

Introduction

1    By an Originating Application filed 12 June 2025, Insurance Australia Limited (IAL) and CGU Australia Pty Ltd (CGUA) seek confirmation, under s 17F of the Insurance Act 1973 (Cth) (the Act), of a scheme for the transfer of part of IAL’s insurance business to CGUA (the Scheme).

2    IAL and CGUA are wholly owned subsidiaries of Insurance Australia Group Limited (IAG).

3    The insurance business that lies at the heart of the Scheme is, chiefly, that of a division of IAL (known as “Intermediated Insurance Australia” (IIA)), being in respect of policies issued under active CGU Insurance (CGU) and WFI Insurance (WFI) brands, as well as a number of IAL branded policies in run-off. The Scheme also concerns certain business assets and agreements used for the purpose of conducting the insurance business in question. For the sake of brevity, such policies, assets and agreements are forthwith referred to as the “Transferring Business”.

4    In substance, the Scheme involves the transfer of IAL’s active intermediated business – under which policies issued by it are, for the most part, provided to policyholders through a large and established network of brokers, underwriting agencies and authorised representatives – as well as some of its run-off business, to CGUA (being, as of May 2025, an authorised general insurer in the broader IAG group of companies (henceforth, the IAG Group)).

5    An application for confirmation of the Scheme cannot be made unless the requirements set out in s 17C(2) of the Act are met. In this respect, the application presently before the Court seeks orders dispensing with the requirement in s 17C(2)(c), insofar as it mandates a summary of the Scheme, as approved by the Australian Prudential Regulation Authority (APRA) (the Scheme Summary), to be given to “every affected policyholder” (as that phrase is defined in s 17C(1)).

6    More specifically, the applicants, IAL and CGUA, seek to dispense with the need for a Scheme Summary to be provided to holders of policies within the Transferring Business (Transferring Policyholders and Transferring Policies, respectively) in circumstances where:

(a)    the Transferring Policies are issued by IAL via a broker or underwriting agency.

(b)    the Transferring Policies are not “active” (in the sense that the policy has expired and there is no open claim made under it).

(c)    the Transferring Policies, issued directly by IAL or via an authorised representative, are in respect of insureds of whom IAL does not hold contact details.

(d)    to the extent that they are “affected policyholders”, there are certain underlying insureds or third-party beneficiaries who may obtain a benefit under the Transferring Policies.

7    The rationale that undergirds such application is said to rest upon the following considerations.

8    First, the Transferring Business is, to a large degree, an intermediated insurance business where (a) the established policy distribution method for a large portion of the Transferring Policies is via an established network of brokers and underwriting agencies (such that any communication with policyholders is generally conducted by the intermediary); and (b) as a matter of practice and agreement, IAL does not have an accurate data set of current policyholder’s contact details.

9    Second, there is a large number of expired policies, the liabilities of which are to be transferred under the Scheme. To a significant degree, neither IAL nor its intermediaries have accurate or complete details of the holders of expired policies as there is, and has been, no reason to contact them once that expiration occurred. On the available evidence, it appears that only a very small number of policyholders will make any claim upon the expired policies and, given that it would be both expensive and impractical to identify exhaustively their contact details, it is claimed that it would be inappropriate to require each person to be contacted individually.

10    Third, whilst the proposed transfer involves a disaggregation of IAL’s business to some degree, the Scheme is an intragroup scheme (which does not involve the change of any terms of, or the systems or processes for administering claims for, the Transferring Policyholders). In this vein, it is said, with reference to actuarial evidence, that the Scheme will not have an adverse material effect on Transferring Policyholders or, in any event, holders of IAL policies that are not being transferred under the Scheme (the Remaining Policyholders).

11    Fourth, the scale of the business to be transferred (approximately 926,000 active policies) and the wide publicity intended to be given to the Scheme under the applicants’ proposed orders, is said to be likely to ensure that it is brought to the attention of sufficient policyholders, such that all relevant objections to the Scheme can be raised at a subsequent confirmation hearing.

General background to the Scheme

12    To appreciate the context in which the present application comes before the Court, some colour must be given to the following considerations:

(1)    The nature of the IAG Group (and, in particular, that of IAG, IAL and CGUA)

(2)    The current insurance business of IAL (and, in particular, its RIA and IIA divisions)

(3)    The proposed new insurance business of CGUA

(4)    The general purpose and rationale of the Scheme

(5)    The nature and distribution of the Transferring Business

The IAG Group

13    IAL and CGUA are “related bodies corporate” for the purposes of the Corporations Act 2001 (Cth) (Corporations Act). They are each wholly owned by IAG. IAG is an authorised “non-operating holding company” and the “Level 2” parent company of the “Level 2” IAG Group (as defined by Prudential Standard CPS 001, Defined Terms (CPS 001)). The IAG Group is a general insurance group. It is the largest general insurer, and has controlled entities, in both New Zealand and Australia. In Australia, it has some 13.2m current general insurance policies.

14    IAG owns two “operating” entities in Australia: IAL and Insurance Manufacturers of Australia Pty Limited (IMA). CGUA will become a third such entity if the Scheme is confirmed.

15    IAL has approximately 8.5m active general insurance policies, of which 920,000 form part of the Transferring Business. It is authorised by APRA under s 12 of the Act to carry on insurance business in Australia and has been a registered corporation since 1926. It is referred to as a “Level 1” insurer for prudential purposes (as that expression is defined in CPS 001).

16    IAG holds 70% of IMA, which is a joint venture with Royal Automobile Club of Victoria (RACV), through which the products of National Roads and Motorists’ Association (NRMA) and RACV are distributed in New South Wales, Victoria and the Australian Capital Territory.

17    CGUA has been a (a) registered corporation since 1960; and (b) wholly owned subsidiary of IAG since 1 April 2013. Since 2017, it has been a non-operating entity within the IAG Group. Prior to that time, it operated as a “non-operating holding company” of the entity that operated the Victorian personal lines portfolio comprising the Swann insurance business, which issued specialised motor and motorcycle policies. That insurance business was consolidated into IAL as part of scheme confirmed in 2017 and, since that time, CGUA has been a dormant entity.

18    In 2024, the IAG Group commenced an engagement with APRA for the authorisation of CGUA as a direct subsidiary of IAG within its Level 2 insurance group. Following the submission of information and documentation, APRA approved CGUA to carry on insurance business under s 12 of the Act on 6 May 2025. CGUA is now a “Level 1” insurer in the IAG Group.

The insurance business of IAL

19    IAL currently has two “operating” divisions: Retail Insurance Australia (RIA) and IIA.

20    RIA deals generally in personal lines general insurance products that are sold directly to retail customers. The RIA business writes direct personal insurance in Australia with products sold through branches, call centres, the internet and representatives under a number of different brands. The insurance products sold include both “short tail” products (such as motor, home, contents, strata, lifestyle and leisure insurance, business packages and farm) and “long tail” products (such as professional indemnity and compulsory third-party insurance).

21    The Scheme does not involve the transfer of any insurance business conducted in RIA.

22    IIA deals predominantly in commercial lines general insurance products which are provided to customers, usually through a network of intermediaries (brokers, underwriting agencies etc).

23    The Transferring Business, which is a part of the IIA division of IAL, offers general insurance products to businesses and individuals across Australia via a network of intermediaries such as brokers, agents and authorised representatives. It does so under the brands of CGU and WFI. The products offered include both “short” and “long” tail insurance products.

The proposed business of CGUA

24    Under the Scheme, CGUA, having been authorised to carry on insurance business in May 2025, intends to replicate the existing IIA business by utilising a so-called “lift and shift” approach for the IIA business, by moving it from IAL to itself. As a result, (a) the Transferring Policyholders will continue to be serviced by the same claims management systems and claims teams; (b) the underwriting and pricing policies applicable to IAG Group subsidiaries will apply to CGUA; and (c) CGUA will adopt the existing risk management framework and strategies, reinsurance management strategies, and framework and operational and compliance policies which are presently established and embedded in the IAG Group. This will permit it to commence writing new business from the date that the Scheme takes effect.

25    Further detail as to how the business of CGUA is sought to be operated, managed and governed (if the Scheme is confirmed) is set out in the affidavit of a Christa Marjoribanks (filed 12 June 2025) (the Marjoribanks Affidavit). There, it is said that:

(1)    CGUA intends to have the same general target market and customer segmentation, general insurance products, delivery channels, and promotion and marketing as IIA.

(2)    Noting that all Australian group employees of IAL are currently employed by Insurance Australia Group Services Pty Limited (IAGS), the staff supporting IIA will transition to supporting CGUA while continuing to be employed by IAGS. Approximately 2,500 employees are intended to form part of the CGUA workforce.

(3)    The CGUA Board is comprised of four independent non-executive directors and one executive director, all of whom have substantial experience in the insurance industry.

(4)    The IAG Group Underwriting Policy, which presently captures all licensed subsidiaries in the IAG Group, will extend to include CGUA.

(5)    There will be no changes to the approach that is taken to the pricing of products of the Transferring Business as a result of the Scheme.

(6)    The policy and claims administration processes for policyholders and future plans will not change as a result of the Scheme. The contact details for call centres will remain and Transferring Policyholders should experience the same level of customer service.

(7)    The existing IAG Group policy frameworks in place in relation to operational and compliance aspects will continue to apply to CGUA.

The general purpose and rationale of the Scheme

26    CGUA asserts that each of the IIA and RIA divisions of IAL have different insurance focuses with different technology requirements. IAG’s strategy underlying the Scheme is that each of those divisions will operate through their own authorised entities rather than one. This has the effect of repositioning the intermediated business within a separate company for “long term success” and, in broad terms, greater ease of management. It is claimed that the separately governed intermediated business will benefit Transferring Policyholders by reason of the single approach to business, in the sense of it being run independently of the retail business of IAL.

Nature and distribution of the Transferring Business

27    The Transferring Business largely consists of intermediated commercial lines of policies. Of the active Transferring Policies, approximately 94.5% are intermediated (with the remaining 5.5% being sold directly to customers). Of the expired transferring policies, approximately 96.5% are intermediated policies (with the remaining 3.5% being sold directly to customers).

28    IAL underwrites insurance from two main brands in its IIA division: the CGU and WFI brands.

29    Under the CGU brand, IAL offers a wide variety of insurance products, primarily distributed via third-party intermediaries of which most, but not all, will be transferred under the Scheme. The intermediated business comprises about 99.3% of CGU’s book.

30    Under the WFI brand, IAL offers a variety of agricultural sector policies, which are distributed directly (about 38% of WFI’s book) and via intermediaries, namely authorised representatives.

31    For the purposes of this application, it ought to be kept steadily in mind that IAL does not hold complete or accurate details for CGU policyholders intermediated by brokers or underwriting agencies, or holders of expired policies (other than those upon which a claim has been made).

32    The Transferring Business includes a mixture of “short” and “long tail” products. “Short tail” products are products upon which claims are typically made for losses which are able to be identified and, in the usual course, are claimed for shortly after the occurrence of an insurable event. Conversely, for “long tail” products, claims may not be reported within 12 months to the insurer and settlements can take a number of years. That said, IAL’s experience is that over 99% of claims on such products are reported within three years of the date of loss. The main claims that are not made within three years are known as “latent claims”, which may be made as many as sixty years later (such as asbestos claims, silicosis claims and molestation claims).

33    Also intended to be transferred under the Scheme are “long tail” policy liabilities pursuant to builders warranty policies that are no longer active. As at February 2025, there were only eight open claims upon such policies and it is expected that very few further claims will be made.

“Underlying insureds”

34    The Transferring Business includes policies where persons or entities, other than or in addition to the policyholder, receive the benefits of the relevant insurance cover as underlying insureds or third-party beneficiaries under master policy arrangements or individual policy terms. In many such cases, the cover is extended to those underlying insureds automatically, though they do not have any rights which they can exercise in relation to matters such as contract formation, administration or cancellation.

Key elements of the Scheme

35    It is said that the Scheme follows a form which is typical for general insurance schemes which have been confirmed under Div 3A of Pt III of the Act. In general terms, it gives effect to an Implementation Agreement executed by IAL and CGUA (dated 12 June 2025) which, amongst other things, sets out the commercial arrangements between them in relation to the sale and transfer of the Transferring Business. Its salient elements are as follows:

(1)    IAL’s rights, title and interests in the Transferring Policies and certain business assets, contracts and records in connection with the Transferring Business (Transferring Business Assets) will be transferred to, and vested in, CGUA;

(2)    all claims, losses, liabilities and costs under the Transferring Policies and Transferring Business Assets will be transferred to and assumed by CGUA. In this way, CGUA will assume all obligations of IAL as insurer under the Transferring Policies, and will be substituted for IAL under the Transferring Policies and associated Business Contracts;

(3)    the Scheme will not affect any change to the terms of any Transferring Policy or affect any claim in respect of such a policy issued by IAL;

(4)    policyholders (and people claiming through them) will continue to have the same rights, benefits and liabilities under any relevant policy or claim with CGUA as the insurer;

(5)    any proceedings which are pending, or which are brought at or after the date of transfers envisaged by the Scheme, will be commenced or continued by or against CGUA;

(6)    in relation to reinsurance, CGUA will be able to rely on and enforce any rights that IAL had as reinsured under treaties and agreements it had entered into to provide indemnity and/or benefits in respect of any Transferring Policies. Furthermore, any facultative reinsurance agreements, which IAL had entered into as reinsured to cover specific or identifiable risks under any of the Transferring Policies, will be transferred to CGUA as valid, effective and continuing agreements; and

(7)    costs in connection with the Scheme will be paid by IAL.

36    The Scheme is subject to several conditions. For instance, the Commonwealth Treasurer must provide the necessary approval or consent under the Insurance Acquisitions and Takeovers Act 1991 (Cth) on terms satisfactory to CGUA. Other conditions include the payment or transfer, by IAL to CGUA, of an amount or assets equal to a defined “Transfer Value”, and the consent of the Court under the Act being given.

The relevant legal framework

37    Division 3A of Part III of the Act concerns the transfer and amalgamation of insurance businesses. Section 17B(1)(a) provides that no part of the insurance business of a general insurer may be transferred to another general insurer save pursuant to a scheme confirmed by the Court. Relevantly, s 17B(2) of the Act provides that a general insurer, to whom insurance business is transferred, can be a “body corporate” (here, CGUA) that is “authorised under this Act but has not begun to carry on insurance business in Australia”.

38    For the sake of completeness, it is appropriate to extract s 17B of the Act in toto:

17B    Transfer or amalgamation of insurance business

(1)     No part of the insurance business of a general insurer may be:

(a)    transferred to another general insurer; or

(b)    amalgamated with the business of another general insurer;

except under a scheme confirmed by the Federal Court.

Note: A transfer or amalgamation of an insurance business may also require approval under the Insurance Acquisitions and Takeovers Act 1991.

(2)    The reference in paragraph (1)(a) to a general insurer includes a reference to a body corporate that is authorised under this Act but has not begun to carry on insurance business in Australia.

(3)     A scheme must set out:

(a)    the terms of the agreement or deed under which the proposed transfer or amalgamation is carried out; and

(b)    particulars of any other arrangements necessary to give effect to the scheme.

39    The present application is most directly concerned with the operation of s 17C of the Act and, in particular, (a) the obligation imposed upon the applicants by s 17C(2)(c); and (b) the discretion conferred upon the Court by s 17C(5). Those provisions relevantly provide as follows:

17C     Steps to be taken before application for confirmation

(1)     In this section:

affected policyholder means the holder of a policy affected by a scheme.

approved summary means a summary approved by APRA.

(2)     An application for confirmation of a scheme may not be made unless:

(a)     a copy of the scheme and any actuarial report on which the scheme is based have been given to APRA in accordance with the prudential standards; and

(b)     notice of intention to make the application has been published by the applicant in accordance with the prudential standards; and

(c)     an approved summary of the scheme has been given to every affected policyholder.

(3)     Without limiting the provision that may be made by the prudential standards for the purposes of paragraph (2)(b), the notice referred to in that paragraph must include, in relation to each body corporate affected by the scheme, details of the place and time at which an affected policyholder may obtain a copy of the scheme.

(4)     An affected policyholder is entitled, on the person’s request, to be provided by the company with one copy of the scheme free of charge.

(5)     The Federal Court may dispense with the need for compliance with paragraph (2)(c) in relation to a particular scheme if it is satisfied that, because of the nature of the scheme or the circumstances attending its preparation, it is not necessary that the paragraph be complied with.

40    Put bluntly, the decisive consideration before the Court is whether, having regard to the nature of the Scheme and/or the circumstances attending its preparation, it is “not necessary” for a Scheme Summary, as approved by APRA, to be given to every “affected policyholder”.

41    Section 17C of the Act refers to “prudential standards”. Pursuant to s 32(1) of the Act, APRA may determine “standards (prudential standards) relating to prudential matters” that must be complied with by, relevantly, general insurers or a specified class of general insurers (emphasis in original). For the purposes of Div 3A of Pt III of the Act, APRA has determined Prudential Standard GPS 410, Transfer and Amalgamation of Insurance Business for General Insurers (GPS 410). In relation to the operation of s 17C(2)(c) of the Act, GPS 410 relevantly provides:

Approved Summary8

12.    An application to the Court for confirmation of a scheme cannot be made unless, amongst other things, a summary of the scheme, approved by APRA (the approved summary), has been given to every affected policyholder.

13.     The approved summary need not be a stand-alone document and the required information may be included in a document, sent directly to the policyholder, that contains other information in relation to the transfer, provided that the required information is prominently featured so that it is obvious to the policyholder.

14.     The format and content of the approved summary will depend on the circumstances of the transfer, however, the insurer should, at a minimum, advise affected policyholders:

(a)     that the insurer proposes to transfer the policyholder’s policy or policies to another insurer, on or after a specified date;

(b)     of the full name and contact details of the other insurer;

(c)     of the effect of the transfer (this explanation may be brief and may, for example, explain that from the date of the transfer all rights and liabilities under the policies will be transferred to the other insurer, so that premiums will have to be paid to, and claims will have to be lodged with, that insurer);

(d)     of any action the policyholder will need to take before or as a result of the transfer (for example, any changes in arrangements relating to paying premiums or lodging claims);

(e)     if the policyholder does not need to take any action before or as a result of the transfer - advise the policyholder accordingly;

(f)     how the policyholder can obtain further information and inspect relevant documents as may be available for public inspection; and

(g)     that the policyholder has the right to attend the Federal Court.

15.     The approved summary must be sent to affected policyholders before the scheme is released for public inspection under paragraph 16.

…

8    Paragraphs 12 to 15 specify matters for the purposes of paragraph 17(2)(c) [sic] of the Act.

42    GPS 410 does not otherwise provide any guidance as to the circumstances in which the Court may dispense with the need for compliance with s 17C(2)(c) under s 17C(5) of the Act.

43    That being so, the Act nonetheless offers some guidance as to how documents may be “given” to affected policyholders. For instance, s 121 relevantly provides:

121    Service of documents and notices

(1)     A document or notice required or permitted to be served on, or given to, a person under or for the purposes of this Act may be served or given:

(a)    in the case of a person other than a body corporate, by serving it personally upon the person or by sending it by registered post to the person at his or her usual or last known place of abode or business;

(b)     in the case of a body corporate incorporated in Australia, by leaving it at or sending it by registered post to the registered office of the body corporate; or…

(2)     In subsection (1), registered office means the office of the body corporate that is the registered office in accordance with the law of the State or Territory by or under which the body corporate is incorporated.

44    That language, albeit of a permissive character, does not contemplate the electronic delivery of documents. Nonetheless, orders have regularly been made to permit a Scheme Summary to be “given” by email or electronic means: see, eg, Application of Medical Insurance Australia Pty Limited under the Insurance Act 1973 (Cth) [2014] FCA 1015 [37] – [38] (Medical Insurance Australia); FM Insurance Company Limited, in the matter of FM Insurance Company Limited [2021] FCA 1442 [19(a)] – [20] (FM Insurance) (and the cases cited therein).

Who is an “affected policyholder” for the purposes of 17C(2)(c) of the Act?

45    An application for confirmation of the Scheme may not be made unless a Scheme Summary has been given to every “holder of a policy affected by” the Scheme: ss 17C(1) and 17C(2)(c).

Meaning attributed to “affected”

46    For the purposes of s 17C of the Act, the expression “affected policyholder” refers to a policy that is affected by the relevant scheme, and not to a holder who is so affected; in that sense, the expression encompasses the holder of a policy being transferred under the Scheme, but does not extend to include the holder of a policy that was in some way affected by the Scheme taking place: see Re Insurance Australia Ltd (2004) 139 FCR 450, 456 – 457 [19] – [24]; Westport Insurance Corporation, in the matter of Westport Insurance Corporation [2009] FCA 1357 [16] (Westport Insurance); QBE Insurance Australia Limited, in the matter of QBE Insurance Australia Limited [2012] FCA 1127 [3]; Ace Insurance Ltd, in the matter of Ace Insurance Ltd [2016] FCA 997 [27] (Ace Insurance); Insurance Australia Limited, in the application of Insurance Australia Limited [2016] FCA 1387 [26] (Insurance Australia 2016). That reading has not been doubted for the purposes of s 17C of the Act: Allianz Australia General Insurance Limited, in the matter of Allianz Australia General Insurance Limited [2023] FCA 994 [14]; Aioi Nissay Dowa Insurance Co Ltd, in the matter of Aioi Nissay Dowa Insurance Co Ltd [2023] FCA 697 [7] (Aioi Nissay Dowa Insurance); Australian Branch of Great Lakes Insurance SE (trading as Great Lakes Australia), in the matter of the Australian Branch of Great Lakes Insurance SE (trading as Great Lakes Australia) [2020] FCA 629 [11] (Great Lakes Insurance).

47    In that sense, the Transferring Policyholders are “affected policyholders” for the purposes of s 17C of the Act; the Remaining Policyholders are, on the other hand, not.

48    It must be kept steadily in mind that such conclusion does not necessarily follow in the context of application for approval of a scheme under s 17F of the Act. In Aioi Nissay Dowa Insurance, Jackman J observed (at [7]) that:

Although an ‘affected policyholder’ is defined in section 17C as the holder of a policy being transferred under the scheme, it is well accepted that the Court is to look to the interests of the relevant policyholders of both the transferor and transferee insurers and consider whether the implementation will detrimentally affect them in a material way.

49    That is, at any confirmation hearing for the Scheme, a core factor for the Court’s consideration will be whether the implementation of the Scheme will materially detrimentally affect any of the policyholders of a body corporate affected by the Scheme. However, for the purposes of the present application, no further ink need be spilled upon any such considerations.

Meaning attributed to “policyholder”

50    It is a question of fact whether one is a “holder” of a policy of insurance, being something to be determined by reference to the relationship between the relevant individual and policy: see Insurance Australia 2016 [36]; cf position under s 191 of the Life Insurance Act 1995 (Cth), in Macquarie Life Limited, in the matter of Macquarie Life Limited [2016] FCA 973 [18] – [23].

The discretion conveyed under s 17C(5) of the Act

51    Section 17C(5) confers a discretion on the Court to dispense with the need for compliance with s 17C(2)(c) in relation to a scheme “if it is satisfied that, because of the nature of the scheme or the circumstances attending its preparation”, compliance with the section is “not necessary”.

52    The granting of a dispensation order of this nature is a matter of “considerable importance”; indeed, they should not be given as a matter of course: Insurance Australia 2016 [23]; Munich Reinsurance Company of Australasia Limited [2004] FCA 1391 [4]; AAI Limited, application under the Insurance Act 1973 (Cth) [2015] FCA 452 [22]. That is necessarily so because the object of the wider section is to give notice to persons (being “affected policyholders”) who may wish to object to the scheme as proposed: Great Lakes Insurance [13] – [14]; Insurance Australia 2016 [23] – [24]; Re Commonwealth Life Limited [2003] FCA 501 [8].

53    In Insurance Australia 2016, Gleeson J observed (at [25]):

The discretion to make dispensation orders is a general one and the provision does not specify the criteria the Court is to apply in determining whether “the nature of the scheme or the circumstances attending its preparation warrant” the making of the proposed orders.

(Emphasis added).

54    Those observations should be accepted. However, it is also important that the discretion under s 17C(5) of the Act be exercised having regard to the main objects identified by the legislature:

2A    Main objects of this Act

(1)    The main objects of this Act are:

(a)    to protect the interests of policyholders and prospective policyholders under insurance policies (issued by general insurers and Lloyds underwriters) in ways that are consistent with the continued development of a viable, competitive and innovative insurance industry; and

(b)    to promote financial stability in Australia.

55    Whilst acknowledging the object of giving sufficient notice to persons who may wish to object to the Scheme, the Court has evinced a preparedness to grant dispensation when satisfied that the proposed regime for notification of “affected policyholders” will be likely to lead to the notification of a large number of affected policyholders, which is sufficient to bring forth, in all likelihood, any objection to the Scheme that is based upon viable objective grounds: see, eg, Ace Insurance [42]; Insurance Australia 2016 [42]; Great Lakes Insurance [37].

56    The Court has also been prepared to grant dispensation where it is established that (a) there is difficulty in identifying all of the “affected policyholders”; and (b) the utility in providing such policyholders with a Scheme Summary is of questionable relative value. That might arise, for example, in circumstances where business has been written over many years and there are a large number of expired or cancelled policies (albeit with the possibility of a claim still being made under them). In these circumstances, a substantial administrative burden and costs may be involved in complying with s 17C(2)(c) of the Act but with minimal, if any, practical benefit: Great Lakes Insurance [14]. Such policyholders are not likely to have any interest in their policies save to the extent that they might wish to make a late claim: see Re Zurich Australian Insurance Limited [2018] FCA 1567 [25].

The making of dispensation orders in the context of intermediaries

57    On several occasions, orders have been made to the effect that notification of policyholders, for the purposes of s 17C of the Act, should occur through the intermediaries who had issued or distributed the relevant policies: see, eg, Great Lakes Insurance [5], [8] – [9] and [24]; Swiss Reinsurance Company Ltd, in the matter of an application by Swiss Reinsurance Company Ltd [2019] FCA 1453 [5] and [28]; Sunderland Marine Insurance Company Limited, in the matter of Sunderland Marine Insurance Company Limited [2018] FCA 565 [11] – [13] (Sunderland Marine Insurance); AXIS Specialty Europe SE (Australia Branch), in the matter of AXIS Specialty Europe SE (Australia Branch) [2016] FCA 1594 [32] – [33] (AXIS Specialty Europe) [24] – [26] and [36]; Ace Insurance [35] – [36]; Medical Insurance Australia [29]; Westport Insurance [25] and [35].

58    While it must be accepted that each case will, necessarily, turn on its own unique circumstances and that the businesses in question are likely to differ in substance, form and size, some general observations can be made concerning the factors which might bear upon the exercise of the discretion under s 17C(5) of the Act. Such factors were carefully identified by counsel for the applicants, Mr Hollo SC, in his written submissions in the following terms:

(1)    the extent to which policyholder contact details are available to, or otherwise might be accessed or identified by, the insurer, or are in the possession of a relevant intermediary.

(2)    whether arrangements between the insurer and the intermediary result in the latter being the primary point of contact for, or having a direct relationship with, the policyholder.

(3)    the nature and extent of any attempts made by the insurer to (a) obtain the details of the policyholders from the intermediary; or, otherwise, (b) facilitate communication by the intermediary to the policyholder.

(4)    the nature and content of correspondence that is proposed to be sent to the intermediary, and whether it reasonably emphasises the importance of the intermediary providing the Scheme Summary to the policyholders.

59    That being so, it is, ultimately, the practical and fair comprehensiveness of the notification that is proposed to be sent to the “affected policyholders” that is the Court’s primary consideration in determining whether dispensation orders should be made: see Great Lakes Insurance [19].

The proposed communications program

60    The relief sought by IAL and CGUA depends substantially upon the sufficiency of its proposed program to bring the Scheme to the attention of policyholders. In sum, that program involves:

(1)    in respect of active Transferring Policies issued by IAL directly (or through authorised representatives) – the Scheme Summary is to be sent to the policyholders whose contact details are held in IAL’s policy systems by letter sent electronically or by post.

(2)    in respect of active Transferring Policies issued by IAL through an underwriting agent or broker – notification to policyholders is to be provided via their relevant intermediary (who will receive copies of the Scheme Summary and policyholder communications).

(3)    in respect of Transferring Policies for which there is an open claim – the Scheme Summary is to be sent directly to the policyholder (as per subparagraph (1)) or, where the policy has been issued by a broker or underwriting agent, as per subparagraph (2).

(4)    publication of the Notice of Intention, in a form approved by APRA, in newspapers and the Commonwealth Gazette.

(5)    publication of the Scheme documents on a dedicated webpage, which will be accessible via a link on the homepage of various websites maintained by the IAG Group.

(6)    advertisement on social media channels.

(7)    operation of a dedicated email enquiry facility and toll-free telephone number which are to be identified in both the Notice of Intention and the Scheme Summary.

(8)    notification to solicitors and/or peak bodies and institutions with respect to asbestos, silicosis, molestation and builders warranty claims.

Those who will be directly provided with a Scheme Summary

Direct notification to policyholders

61    The Transferring Policyholders whom the applicants intend to provide a Scheme Summary to, either directly or via authorised representatives, fall into two cohorts.

62    The first category concerns a relatively small number of (approximately 5,475) CGU workers compensation policies which are distributed directly by IAL to policyholders. IAL holds postal addresses for all such policyholders and email addresses for some 96% of them; it is said to have a high degree of confidence in the completeness and accuracy of that information.

63    The second category concerns WFI branded products. They apply to the agricultural sector, and constitute about 120,000 active policies. Such policies are distributed directly by IAL, through IAG employees (such as regional sales representatives and consultants) and authorised representatives, using both a “general advice” model (with face-to-face sales representatives) and a “no advice” model (with contact centre staff). It is said that IAL’s “usual practice” is to communicate with WFI policyholders directly, regardless of whether they were intermediated by authorised representatives; accordingly, IAL is said to hold a high degree of confidence in the completeness and accuracy of the recorded contact details for this group of policyholders.

64    In these circumstances, the applicants propose to provide personal notice:

(1)    directly to CGU direct policyholders, including those with open claims, in substantially the same form of a letter set out at page 8; and

(2)    directly to WFI policyholders, including those with open claims, in substantially the same form of a letter set out at pages 3 – 5,

of Tab 13 of Exhibit CM-1 to the Marjoribanks Affidavit.

CGU policies intermediated by a broker

65    CGU branded policies within the IIA business of IAL are primarily distributed via third-party intermediaries. These relations are managed by a separate business unit within IIA.

66    It must be kept steadily in mind that the relationship as between IAG and brokers in relation to the intermediated policies is substantial and complex. At a very high level, it appears that IAG negotiates with brokers the terms of certain CGU insurance products that will, in turn, be (a) underwritten by IAL; and (b) distributed by brokers to their clients. The business relating to these policies is significant, consisting of some 680,000 active policies. Further, some 15,000 brokers distribute CGU products in Australia as part of roughly 2,000 brokering businesses.

67    The relationship between IAL and such brokers is substantially in accord with industry practice, and regulated by agreements between them known as “Terms of Trade”. There are approximately 414 Terms of Trade agreements with IAL’s broker partners, albeit they are in substantially the same form. In general terms, such agreements contain clauses to the effect that the broker acknowledges and agrees that it acts as agent for each client, and has the consent of each client to accept, on their behalf, all notices, documents, correspondence and other materials issued by the insurer. Though exceptions exist (for example, vis-à-vis Marsh), such conventions are nonetheless said to be reflected in commercial practice.

68    A sample of the Terms of Trade condition in this respect is as follows:

2.1    Broker acknowledgment and agreement

The broker acknowledges and agrees that:

(a)     it will provide financial product advice and deal in relation to the Insurance Products on the terms of this Agreement and under its own AFSL;

(b)     it acts as agent for each Client and not as agent of the Insurer;

(c)     it has consent from each Client to accept, on the Client’s behalf, all notices, documents, correspondence and other materials issued by the Insurer …

69    The Terms of Trade also include continuous warranties from the broker that it:

(1)    holds an Australian Financial Services Licence (AFSL) that “covers the provision of financial product advice and dealing in relation to Insurance Products” (which are listed in a Schedule to the agreement);

(2)    has not, and has never been, “the subject of a banning, disqualification, suspension or cancellation order”; and

(3)    has “full authority and all necessary consents to enter into and perform its obligations under [the Terms of Trade agreement]”.

70    The Marjoribanks Affidavit suggests that it is the “usual” practice of IAL, and traditionally the “strong preference” of brokers, that IAL only communicate with brokered policy holders through the broker. That is logical enough given the policyholder is the broker’s client and the broker is paid to represent the client to the insurers. This understanding is reflected in the Terms of Trade, which stipulates that the insurer is not to contact any client of the broker except in defined limited circumstances. Those exceptions include, for example, where the insurer is required to contact the client by law or where the client makes a claim under the policy.

71    Given the Terms of Trade between IAL and its brokers, as well as the preference of brokers, it is not surprising that IAL does not have a complete or necessarily accurate list of contact details for CGU policyholders intermediated by brokers.

72    That being so, and in anticipation of this application, IAL has engaged with the larger broking groups in relation to the notification of affected policyholders. Amongst other things, it issued a formal communication to its brokers in March 2025 in relation to the provision of notification of the Scheme to policyholders. In part, the letter read:

In the coming months, we must complete the below required activities together prior to CGUA becoming operational:

•    Updating collateral, documents and systems (where applicable) to correctly reflect CGUA as the new insurer (replacing IAL).

•    Notifying policyholders of the scheduled court dates for the Scheme application, which will facilitate the transfer of the CGU business to CGUA.

…

How will we communicate the changes to policyholders?

Once we have received approval from the Federal Court, the formal notification process can commence with brokers and policyholders. As the agents of policyholders, we will notify brokers of the proposed Scheme Transfer. To support you in notifying your clients we will provide a template notification letter with the required Summary of Scheme document.

The letter and Scheme document will be provided after we have obtained formal orders from the Federal Court. This will be prior to the commencement of the public inspection period, currently scheduled for a three-week period in June/July 2025.

To further support this transition, IAG will set up a dedicated webpage, phone and email lines of enquiry for brokers and policyholders to address any questions they may have about the proposed Scheme Transfer. ….

73    Following the distribution of that letter, IAL has engaged in several discussions with brokers in relation to the logistical issues associated with attaching a Scheme Summary to any email to its customers. Those discussions appear to have proven somewhat fruitful. For example, IAL proposes to advise brokers of the option of enclosing the Scheme Summary in emails to policyholders by way of an attachment or a digital link. IAL continues to liaise with brokers in relation to overcoming logistical issues and the evidence of that has been appropriately set out in the Marjoribanks Affidavit. Importantly, no broker has informed IAL that they do not intend to distribute the communications to policyholders. Indeed, there is no immediately apparent reason as to why they would not fully cooperate with IAL.

74    The proposed notification to CGU brokers is annexed to Exhibit CM-1 of the Marjoribanks Affidavit. It includes, inter alia, a covering letter to the broker attaching the Scheme Summary and a template letter for the broker to send to all relevant policyholders.

75    The covering letter is headed with the following emboldened text:

This document includes important information with respect to the Federal Court mandated CGU policyholder communication regarding the upcoming scheme transfer.

(Emphasis in original).

The following text stresses the importance of providing the Scheme Summary to policyholders:

One of the steps that must be carried out as part of the Federal Court’s approval process is the provision to affected policyholders of a Summary of the Scheme that has been approved by APRA (the Summary of Scheme). The Summary of Scheme sets out important information for policyholders with respect to the proposed transfer.

The Federal Court ordered on [insert date] that CGUA provide to brokers representing clients of CGU a copy of the Summary of Scheme. We attach a copy of the Summary of Scheme and a template letter to assist in the delivery of the Summary of the Scheme to impacted policyholders. Impacted policyholders are your clients who either have an active CGU policy or those who have an open claim on their CGU policy. Also attached is an FAQ to further assist you with this.

(Emphasis in original).

76    The material proposed to be sent by IAL also includes a document covering frequently asked questions which, in short, explains (a) the transfer proposed under the Scheme; (b) the nature and content of the Scheme Summary (including that it has been approved by APRA); and (c) where brokers can access further information about the Scheme. It includes the following:

Notification to policyholders

Will brokers receive guidance on what to provide to policyholders?

One of the steps that must be carried out is the provision to affected policyholders of a summary of the scheme.

We are notifying brokers as agents of the policyholders of the proposed Scheme Transfer and advising them that it is an important change impacting the policyholder. To assist with the communication to their policyholders, we are providing the following documents:

•    Template notification letter – brokers can use this template to send the regulatory Summary of Scheme document to their policyholders. Brokers may wish to update this template before sending it to policyholders (eg add your branding).

•    Summary of Scheme – brokers cannot update this document as it has been formally approved by APRA and the Federal Court.

(Emphasis in original).

77    Under the question “Are brokers required to notify and send the Summary of Scheme to their policyholders?”, the following answer is provided:

It is important that policyholders are made aware of the Scheme. The Federal Court has issued orders that the Summary of Scheme document be provided to policyholders (including those who have an open claim), and brokers, as agents of the policyholders, should provide this to their policyholders. Brokers may use the template notification letter to send the summary of scheme to advise their policyholders about the proposed Scheme Transfer.

(Emphasis in original).

78    It is sufficiently apparent that IAL is endeavouring to highlight, to the brokers, the significance of their taking all necessary steps to pass the Summary Scheme to the policyholders.

CGU policyholders intermediated by an underwriting agency

79    IAL provides a number of agencies with an underwriting and claims authority to distribute, underwrite and manage claims on its behalf. The policies issued pursuant to this regime are either directly distributed by the underwriting agency to the customer, or distributed through a broker. Of these, there are approximately 120,000 active CGU policies which have been underwritten by IAL through 11 main underwriting agencies. Such policies cover a number of different product lines, including freight and marine cargo, construction and engineering, small business, agriculture and farm, motor and home insurance.

80    The aforementioned underwriting agencies operate pursuant to Agency Agreements with IAL, albeit not all are in the same form. In nine such agreements, there exists a clause requiring the underwriting agency to send, to insureds, all notices which IAL is required by law to send to insureds. Other agreements are more general in their terms, but impose obligations upon the underwriting agency to assist IAL to comply with its legal obligations and comply with any procedures provided or notified by IAL in relation to the business the subject of the agreements.

81    In the usual course, the agency maintains the contact details of the relevant policyholders and communicates directly with them via post, email or phone, utilising its own systems to generate correspondence. This practice is reflected in some of the Agency Agreements as between IAL and the underwriting agencies, which include terms that IAL will not contact or make any direct approach to any insured other than in defined (and exceptional) circumstances. In the usual course, therefore, IAL does not directly contact policyholders intermediated by an underwriting agency. Indeed, the contact details of policyholders is not generally held or passed to IAL. By reason of this business practice, IAL does not itself have complete or necessarily accurate contact details for CGU policyholders intermediated by underwriting agencies.

82    In anticipation of the current proceedings, IAL has engaged with its underwriting agencies in relation to the Scheme and the proposed approach of notification to policyholders. In March 2025, it issued a formal communication to them foreshadowing the proposed transfer, and advised that “there are some required activities that we must complete together prior to CGUA becoming operational” (emphasis in original). Those required activities were said to include, inter alia, notifying “policyholders of the court dates when the Scheme application transferring the CGU business to CGUA will occur”. An attachment to that communication indicated IAL would notify the underwriting agencies to “effect notification” to their brokers (as agents of policyholders) and direct policyholders of the Scheme. To assist them to do that, IAL indicated it “would provide” a template notification letter and the required Scheme Summary document.

83    None of the underwriting agents with whom IAL has engaged in relation to these matters has indicated that they do not intend to distribute the communications to their policyholders. The form of the proposed notifications to the underwriting agencies and brokers is attached as part of the material now before the Court. In general terms, such material, comprising a covering letter to the underwriting agency (attaching the Scheme Summary), a template letter for those agencies to send to policyholders or the policyholder’s broker, and a “Underwriting Agency FAQs” document, (a) is drafted in terms akin to that of the correspondence proposed to be sent to CGU brokers (see supra [75] – [77]); and (b) emphasises, in clear terms, the importance of policyholders being informed of the Scheme and receiving the Scheme Summary.

Those who will not be directly provided with a Scheme Summary

Expired policies

84    IAL does not propose to provide a Scheme Summary to holders of expired policies who do not have an open claim. In this regard, it is said the quality of contact information held in relation to such policies by IAL and its intermediaries deteriorates over time, given that it is not part of the “business-as-usual practice” to communicate with holders of expired policies. Further, and self-evidently, policyholder contact information details often change with the passage of time.

85    On the evidence before the Court, it is estimated that a claim will ultimately be made on only some (a) 2% of policies which have expired in the past year; and (b) less than 1% of policies which have expired in the past three years.

86    Notification of expired policies would, in turn, require notification of some additional 300,000 policyholders (for policies that have expired in the last year) or 860,000 policyholders (for policies that have expired in the past three years). In these circumstances, Mr Hollo SC submits that it would be both expensive and impracticable to enhance the quality of contact detail information held or to exhaustively identify the contact details of all holders of expired policies.

87    Though it is obviously useful to inform as many policyholders as possible of the Scheme, some pragmatic limitations must occur. In light of the time, effort, and expense which would be incurred in informing these policyholders, when compared to the benefit of so doing, IAL’s intention not to inform them of the Scheme directly is wholly justified.

Underlying insureds

88    IAL does not propose to provide a Scheme Summary to underlying insureds (being persons or entities, other than or in addition to the policyholder, who receive the benefits of the relevant insurance cover under master policy arrangements or individual policy terms). That course is justified. On the evidence before the Court, there is insufficient information to conclude that such persons are holders of a relevant policy: see, eg, Insurance Australia 2016 [28] – [29], [36]. That being so, there is no obligation to separately provide them with a Scheme Summary.

89    In any event, IAL does not, in the ordinary course of business, contact such insureds. It is not likely to be possible to readily identify who they are, or estimate their number. In addition, it would necessarily be difficult to ascertain their contact details. Such is apparent, for example, in relation to workers compensation insurance policies which are taken out by employers, albeit that they extend to cover employees as underlying insureds.

Public aspects of the communications program

90    Apart from notification of the Scheme and provision of the Scheme Summary to policyholders and intermediaries, IAL also proposes to undertake a broader program of publication of the Scheme. Some of the steps identified are those required under the Act and GPS 410, such as:

(1)    arranging for publication of the Notice of Intention (as approved by APRA) in both the Commonwealth Gazette and newspapers that have been approved by APRA;

(2)    making available a copy of the Scheme document, the Scheme Summary, the Notice of Intention and each of the actuarial reports relied upon for inspection at certain locations referred to in the Notice of Intention (and as approved by APRA);

(3)    making the Scheme information available via a link from a number of websites;

(4)    establishing an email enquiry facility and 1300 telephone number (as identified in the Notice of Intention and Scheme Summary) so policyholders can make contact if they have questions about the Scheme or wish to request a copy of the Scheme documents;

(5)    providing a copy of the Scheme documents to policyholders free of charge (on request); and

(6)    advertising the Scheme on social media channels (namely, Facebook and LinkedIn).

91    With respect to latent claims that may be made at a future time under the Transferring Policies, IAL proposes to send notifications about the Scheme to the corporate office of solicitors who are known to represent claimants in respect of asbestos claims, silicosis claims, molestation claims and builders warranty claims. A list of those solicitors has been identified in the materials. IAL and CGUA also propose to send notification about the Scheme to a number of institutions and bodies which may be in contact with policyholders involved in any such claims.

Grounds for dispensation

92    In this case, it is inevitable that some dispensation is required; IAL does not have accurate or complete details of the holders of policies (a) issued or distributed by brokers and underwriting agencies under the CGU brand who have the direct commercial relationship with the relevant policyholder; or (b) which have expired. Moreover, it would be immensely difficult, not to mention extraordinarily costly, to acquire that information.

93    In any event, dispensation from the requirements of s 17C(2)(c) of the Act is appropriate having regard to both the nature of the Scheme and the circumstances attending its preparation.

Nature of the Scheme

94    An important characteristic of the Scheme is that it involves, in substance, the transfer of an intermediated insurance business. That which is being transferred is, with some exceptions, the business of IIA. The underlying rationale for such transfer is to move the intermediated business to CGUA as a separate, authorised entity within the IAG Group. However, the nature of that business and its concomitant arrangements and business practices for the distribution of policies and communications with policyholders, gives rise to difficulties for IAL in complying with the requirement of s 17C(2)(c) of the Act to provide a Scheme Summary directly to all of its active Transferring Policyholders.

95    To overcome this, where IAL, in the ordinary course of business, communicates directly with the policyholder and has accurate and complete policyholder contact details, it proposes to provide a Scheme Summary directly to those persons. Conversely, where it is an intermediary who communicates directly with the policyholder and IAL does not have accurate and complete contact details, it is proposed to give notice of the Scheme and Scheme Summary to the relevant intermediary who may then provide them to the policyholder. That accords with the usual day-to-day practice of communication with policyholders and serves to maintain a high degree of confidence in the completeness and accuracy of the contact details of the active policyholders.

Intermediated CGU policies

96    A substantial proportion of the active Transferring Policies are CGU branded policies which are distributed or issued by a broker or underwriting agency. As has been identified above, the usual practice is for such intermediaries to communicate with the policyholder. That being so, and given the contractual arrangements between the insurer and intermediary, and IAL’s lack of any complete or accurate set of contact details for such intermediated policyholders, it is proposed that the notification of the policyholders occurs through those intermediaries. On any objective view, it is more than likely that those intermediaries will undertake the necessary task of informing their policyholders and providing the Scheme Summary to them because:

(1)    the applicants have prepared draft communications to be sent to the various groups of intermediaries concerned, explaining both the process and importance of the Scheme Summary being given to policyholders. This draft correspondence will attach a copy of the Scheme Summary, a template letter to either the policyholder or broker (as the case may be in order to facilitate communication with the policyholder) and a document setting out answers to frequently asked questions which provide further background.

(2)    IAL has undertaken a program of communicating with brokers and underwriting agencies in which it has stressed the importance of them meeting IAL’s expectations to provide notification to policyholders. The evidence of IAL’s engagement with the intermediaries strongly indicates that the latter will undertake that which is requested of them, and that IAL will work with any who encounter logistical difficulties.

(3)    no broker or underwriting agency group has indicated an intention not to distribute the communications to policyholders.

(4)    to a degree, the contractual obligations of the intermediaries require them to act in a way which would cause the necessary information to reach the policyholders.

(5)    the brokers and the underwriting agents are each AFSL holders and, as such, are subject to the statutory duty imposed upon them under s 912A of the Corporations Act to “do all things necessary to ensure that financial services covered by the licence are provided efficiently, honestly and fairly”: see Australian Securities and Investments Commission v RI Advice Group Pty Ltd (2022) 160 ASCR 204, 211 – 212 [29] – [30]; Australian Securities and Investments Commission v National Australia Bank Limited [2022] FCA 1324 [349] – [354]. Those intermediaries also have concomitant duties under the general law which, assuming they are performed, will result in the provision of the necessary information to the policyholders.

97    The practical steps undertaken by IAL, and those proposed in the orders sought, to provide the information required to policyholders are reasonable and proportionate in the circumstances. The correspondence that has been, and is to be, provided to the intermediaries, identifies the importance of the provision of the Scheme Summary to policyholders and the obligation of the intermediaries to fulfil those obligations. There is no reason to doubt the efficacy of these steps. Further, it would be impracticable and perhaps, legally impossible, for IAL to acquire all the contact information necessary for it to ascertain the contact details of the customers of the intermediaries: see, eg, W.R. Berkley Insurance (Europe) Limited, in the matter of Division 3A of Part III of the Insurance Act (1973) [2016] FCA 374 [11] – [13]; Sunderland Marine Insurance [6] – [7]. In addition, the scale of CGU’s intermediated business is large; it involves some 800,000 active policies. Given the extent of the public notification of the Scheme as proposed and the provision of the Scheme Summary by intermediaries, the proposed system of communication will, in all likelihood, bring forward any rational and reasonable opposition that there may be to the Scheme: Insurance Australia 2016 [42]; Great Lakes Insurance [37].

Holders of expired policies in respect of which there is no open claim

98    There are over 864,000 Transferring Policies that have expired in the past three years. Indeed, it is likely that there are substantially more. In light of the intermediary network which exists in relation to them, IAL does not have accurate or complete details of the policyholders in respect of which there is not an open claim. It is, therefore, likely to be of very limited practical utility or benefit in seeking to identify and provide a Scheme Summary to all past policyholders who might be affected by the Scheme. That is particularly so in light of the fact that it is estimated that approximately only 2% of such holders whose policy will have expired in the past year and less than 1% of policies which have expired in the past three years, will have claims. The difficulties which would be encountered if such policyholders were required to be informed would be substantial given the lack of accurate contact details for them. In any event, specific notification is proposed in relation to those solicitors or institutions which commonly represent insureds or handle latent claims. These provide more than adequate justification for not requiring the provision of the Scheme Summary to this group of policyholders, even though they meet the definition of an “affected policyholder”.

Underlying insureds

99    To the extent there are any underlying insureds who might be “affected policyholders”, there is no need to take steps to identify them, ascertain their contact details, and provide them with the Scheme Summary. The steps that are proposed to be followed to provide public disclosure of the Scheme, including in newspapers and on the internet are, in the context of the present case, sufficient.

The intragroup nature of the Scheme and the actuarial evidence

100    As the Scheme effects only an intragroup transfer, the policyholders who are affected will not be faced with a complete change of identity (in the group sense). The terms and conditions of their policies are not varied or replaced under the Scheme, and the claims system and processes presently administered within the IAL Group and its officers and staff will not be subject to any changes. In addition, the actuarial evidence is to the effect that the Scheme is not expected to have any material adverse impact upon the Transferring Policyholders or, indeed, upon the Remaining Policyholders. That view has been adopted by an independent actuary whose conclusions have been agreed with by an actuarial peer reviewer. Therefore, overall, there is only a minimal likelihood that any substantial objection would be made to the Scheme at the confirmation hearing: FM Insurance [19(e)] and [20]; AXIS Specialty Europe [41].

Public notification

101    IAL will take steps to give notice of, and to publish, the Scheme. The broad publication of the Notice of Intention in newspapers and the Gazette, on the internet and IAG branded websites, by operation of a dedicated email address and call centre, by arrangement of public inspection sites, and via advertisement on various social media channels, leads inevitably to the conclusion there will be a broad awareness of the intention to pursue the Scheme. These steps will increase the likelihood that the Scheme will come to the attention of affected policyholders: Application of Gordian RunOff Limited under the Insurance Act 1973 (Cth) [2013] FCA 983 [19]. It also ensures that public awareness is made of the Scheme and any affected person who has any rational and reasoned opposition to it will be informed of their opportunity to oppose it.

Engagement with APRA

102    CGUA has engaged extensively with APRA in relation to this application and, on 5 May 2025, APRA granted authorisation vis-à-vis the Scheme. Between November 2024 and June 2025, the applicants provided drafts of the Scheme document, the Scheme Summary, updates of the actuarial reports and drafts of the lay evidence to be relied upon on this application. Overall, APRA has formally approved the Scheme Summary, the Notice of Intention, the newspapers in which the Notice of Intention is to be published, and the locations for public inspection of the Scheme in each State and Territory.

103    At the dispensation hearing on 20 June 2025, Ms Lyons appeared for APRA. Her submissions clearly articulated APRA’s detailed and careful consideration of the application and its attitude towards it. Overall, APRA is satisfied that the steps which the applicants propose to take to bring the Scheme to the attention of affected policyholders are sufficient to bring forward any rational and reasoned opposition to the Scheme. It is also satisfied that the steps proposed to be taken by the applicants comply with GPS 410. Importantly, it agrees that the evidence does not support a conclusion that the “underlying insureds” identified in the material are holders of relevant policies. It further indicated that, even if the Court reached the conclusion that the underlying insureds were such persons, it would be appropriate to dispense with the provision of the Scheme Summary to them directly for the reasons which have been identified.

104    In addition, APRA indicated that it was satisfied that IAL’s reliance on intermediaries to bring the Scheme to the attention of most affected policyholders was appropriate.

105    It is to be noted that the Court is greatly assisted by APRA’s careful and thorough analysis of the Scheme, and of its observations in relation to the orders now sought by the applicants.

Conclusion

106    It follows that the orders sought are practical and provide for a fair and comprehensive program of direct and public notification to affected policyholders, having regard to the nature and scale of the Transferring Business. In the result, the orders sought by the applicants should be made.

107    It is noted that the parties agree that APRA’s costs of the proceedings should be paid by IAL.

Associate:    

Dated:    1 September 2025