Eric Insurance’s total liabilities are estimated at $7.4-$9.4 million, including sums owed to employees, policyholders and others, administrators say.

The add-on motor insurance product provider has about 63,800 active policies across 51,500 policyholders, a report from administrators appointed on July 28 shows.

On September 16 creditors will vote on a deed of company arrangement that aims to streamline claims processing and enhance outcomes compared with a liquidation.

The administrators’ report says regulatory reforms following the Hayne royal commission, including introduction of a deferred sales model, affected the viability of the business’ add-on products and dealership-based distribution strategy. 

Eric decided to stop underwriting new policies and entered a voluntary solvent run-off from October 2023, with expected sufficient funds to meet existing and future claims.

But a surge in dispute resolution cases and cost obligations due to Australian Financial Complaints Authority matters placed pressure on resources and led to the appointment of voluntary administrators Kathy Sozou and Shaun Fraser from McGrathNicol.

Eric was considered likely to become insolvent in future due to the volume of complaints from fee-paid representatives such as Claimo and Boomerang, and after an AFCA complaint lodgement time extension prolonged exposure to historical issues.

Claim numbers spiked as a June 30 2025 deadline neared for “legacy” disputes, with the report showing “95.4% of all [external disputes] and 89.1% of all [internal disputes]” were brought by Claimo.

As of July 31, Eric estimated it had 733 open internal complaints and 259 open external disputes.

The deed of company arrangement estimates priority employee claims and admitted insurance claims will be paid in full. Policyholders with no current claim other than for a refund for unearned premium of at least $50 will be eligible for a partial reimbursement. 

AFCA, which has a potential claim of about $420,000, has agreed to rank behind unsecured creditors but ahead of subordinated notes issued by Eric. The administrators anticipate there will be no return to AFCA or the noteholders.

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

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