A Federal Court decision has approved the transfer of approximately 920,000 commercial insurance policies from Insurance Australia Limited to CGU Australia, reshaping the intermediated insurance sector.
In Insurance Australia Limited, in the matter of Insurance Australia Limited (No 2) [2025] FCA 1198, the Federal Court of Australia approved a scheme for the intra-group transfer of part of Insurance Australia Limited’s (IAL) intermediated insurance business to CGU Australia Pty Ltd (CGUA). Both IAL and CGUA are wholly owned subsidiaries of Insurance Australia Group Limited (IAG), a major player in the Australian insurance market.
The scheme centers on the transfer of the Intermediated Insurance Australia (IIA) division, one of IAL’s two operating divisions. This division manages commercial lines policies issued under the CGU and WFI brands, as well as various IAL-branded run-off policies and certain business assets and agreements. IAL holds 8.5 million active general insurance policies, and the transfer covers approximately 920,000 of them. The IIA’s commercial portfolio includes business packages, commercial property, farm and crop, construction and engineering, motorcycle, commercial motor and motor fleet, workers’ compensation, professional indemnity, directors & officers, and public and products liability. For the year ending 30 June 2024, the IIA division’s gross written premium was approximately $5.1 billion.
The court’s decision followed a thorough review of actuarial and regulatory evidence. Reports from Kaise Stephan (Deloitte Australia), Lisa Simpson, and Brett Ward (Appointed Actuary for IAG, IAL, and CGUA) concluded that the transfer would not materially reduce the financial protection for policyholders, nor would it alter their contractual rights or claims management processes. The same group-wide policies, capital management frameworks, and reinsurance protections would remain in place after the transfer. The Australian Prudential Regulation Authority (APRA) supported the scheme, confirming compliance with statutory requirements and no adverse impact on policyholder interests.
The process was not without a hiccup. The court noted a minor breach of publication orders when several actuarial reports were temporarily removed from the scheme’s dedicated webpage between July 3 and July 7, 2025, due to concerns about the currency of financial projections. Updated reports were published, and additional newspaper advertisements were issued on August 8, 2025, to alert policyholders. The court found that this brief removal caused no prejudice to policyholders.
No insurance policy clauses were changed or replaced under the scheme; all terms and conditions remained unchanged, and policyholders continued to be serviced by the same teams and systems. The transfer was described as a “lift and shift” operation, ensuring continuity for clients and intermediaries.
This highlights the complexity and scale of intra-group transfers in the insurance industry, with the court and APRA ensuring policyholder protection and regulatory compliance throughout the process.
