Eric Insurance’s creditors have voted for a deed of company arrangement as an alternative to it entering liquidation.

At a meeting last week, they approved the deed proposed by voluntary administrators, establishing arrangements that took effect from Friday.

“The [deed] is designed to provide a superior, more certain and timely return to policyholders, employees and other creditors than would be available in an immediate liquidation,” the administrators said in an update published today.

All current policyholders will continue to have cover for claimable losses that occur until October 17, with notifications required by December 19.

Customers are also entitled to claim for unearned premium from October 18 to the time of their policy’s expiration.

Eric, which sold add-on motor insurance products through vehicle dealers, stopped underwriting new policies and entered a voluntary solvent run-off from October 2023.

The company expected to have sufficient funds to meet existing and future claims, but a surge in dispute resolution cases and cost obligations to the Australian Financial Complaints Authority led to the appointment of administrators on July 28.

The Federal Court last month adjourned an Australian Prudential Regulation Authority application to wind up Eric, allowing time for creditors to vote on the deed of arrangement.

Last Tuesday’s meeting also led to formation of a committee of inspection to consult with administrators in the deed process, with members comprising an employee of Eric, a policyholder, and the law firm Colin Biggers & Paisley as a trade creditor.