The government will set up a new fund to compensate injured workers who are left without cover by the collapse of an insurance firm. The move comes after the Employees Compensation Assistance Scheme ran out of money under the weight of HK$370 million in claims following the collapse of Australian insurer HIH in April last year. Under the law, companies must buy insurance for their employees to cover workplace injuries. The scheme, funded by a levy on employers, steps in to provide cover if the employer has failed to buy insurance or the insurance company goes under. Insurance Commissioner Benjamin Tang Kwok-bun told legislators yesterday that a separate fund was needed in light of the HIH collapse. The sudden claims arising from HIH had increased the financial difficulties of the scheme, which had run out of money in recent years because of a high number of claims. The Insurance Authority and the Hong Kong Federation of Insurers had worked out details of the new compensation fund, to be called the Employees Compensation Insurers Insolvency Scheme, he said. Mr Tang said a levy would be collected from all insurers that sold the employees' compensation insurance, but the level of the levy had yet to be determined. 'The Insurance Authority will make sure all insurance companies which sell employees' compensation insurance join this scheme, or they could not sell the products,' he said. The collection of the levy and the process of handling claims would be managed by a soon-to-be-established Employees Compensation Insurer Insolvency Bureau, which would have a small number of staff. Mr Tang said the bureau would be a non-profit-making company, whose first task after it was set up early next year would be to carry out an actuarial study to determine the level of the levy. 'The Insurance Authority will regulate this body to make sure it manages the compensation fund properly and processes claims in a reasonable manner,' Mr Tang said. Before the new fund can accumulate enough money, the existing scheme will continue to pay for claims of injured workers if their insurers collapse. Bernard Charnwut Chan, legislator representing the insurance industry, believed the levy would be about 1 per cent of the premium income of the employees' compensation policies based on overseas experience.
