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icare > a;icare Self Insurance > Principal Arranged Insurance (PAI)

Principal Arranged Insurance (PAI)

How The Fund Operates

The icare Construction Risks Insurance Fund (CRIF) is a fund established under Section 12C of the NSW Self Insurance Corporation Act 2004. The Act was amended in 2014 to empower icare to issue PAI policies with respect to construction risks, and to insure the risks of construction contractors and partners. As with the vast majority of Insurers, funds collected from agencies for policies issued are accepted as premiums under the Act.

The CRIF supports Treasury policy by selling policies issued under NSW Self Insurance Corporation Act 2004 and bound by the Insurance Contracts Act 1984.


What is PAI?

PAI is insurance generally associated with construction projects.

construction silhouette image courtesy of potowizard FreeDigitalPhotos.net.jpg

Construction insurance can either be a contractual requirement of the contractor or arranged by the client as PAI. The project owner (principal) buys a single insurance policy that covers the Government agency and the multiple contractors (client) engaged throughout the life of the project for the risks of construction (i.e. property, public liability and marine transit where applicable). PAI ensures that a robust insurance program is in place to indemnify against the financial impact of occurrences. The majority of major projects around Australia are now undertaken on a PAI basis.


Providing PAI to Government


Treasury Circular 16/11 requires that all agencies other than State Owned Corporations (SOCs) must adopt PAI for all major capital works projects through icare Self Insurance.

SOCs are required to demonstrate that they can acquire PAI at a price and coverage level that is more competitive than the price offered by icare Self Insurance.

For small capital works projects (under $10 million), agencies may elect between PAI with icare and contractor controlled insurances. 

When to involve icare Self Insurance

$100 million
For projects valued below $100 million, advise icare Self Insurance when the Request for Tender documents are ready for release. This advice needs the scope of works, value, start and end dates. After this initial advice, icare self insurance also needs to be informed of the head contractor.

Alternatively, icare self insurance has created an online facility for agencies to produce quotes, bind cover as required, generate policy documentation and store project-specific information. Contact the Construction Risks team at icare for more details.

$100 million and above
For projects at or over $100 million, icare Self Insurance needs to be more involved at an earlier stage. Advise us at the initial planning phase and we will work with your agency to develop a detailed profile of the project’s risks.


Lower Costs

icare Self Insurance will provide the necessary levels of insurance for each project. We collect the premium and will meet the cost of claims through the Construction Risks Insurance Fund. The need for insurance is removed from contractors lowering their costs, while premiums payable are retained by Government. There are also economies of scale in having a single provider of cover for all major Government projects.

Owning Risk

PAI through icare Self Insurance removes the administrative burden imposed on government agencies of ensuring contractor policies remain current as well as complex issues surrounding who may be responsible for a loss or liability that occurs at various stages of the project.
We encourage improved risk management at a whole of government level. PAI related risks can be more proactively managed with the government both owning the risks and insuring against the risks through icare. As the single provider of PAI we assist the government in having a greater level of visibility over the aggregated risk profiles for major capital projects. icare Self Insurance premiums do not include a profit margin or service capital. Costs charged reflect the nature of the construction risk.

Spreading Risk

Risks are reinsured (i.e. reinsurers will accept their responsibility to pay claims made under a reinsurance agreement) through a large reputable network of APRA regulated reinsurers and international reinsurers. If there were to be a substantial loss on a project this would represent a significant burden. Because of this, icare Self Insurance purchases insurance, as it does when protecting other Government assets and liabilities.

More information


Construction Material Damage Wording (PDF, 514KB)
Construction Liability Wording
(PDF, 463KB)
NSW Self Insurance Corporation Amendment Bill 2013
(PDF, 207KB)

Contact icare Self Insurance


Ibrahim Fajloun

  02 9216 3852
Email:   Ibrahim.Fajloun@icare.nsw.gov.au

Updated: 31/05/17

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