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This is a Bill, not an Act. For current law, see the Acts databases.
1998-1999-2000-2001
The
Parliament of the
Commonwealth of
Australia
HOUSE OF
REPRESENTATIVES
Presented and read a first
time
General
Insurance Reform Bill 2001
No. ,
2001
(Treasury)
A Bill
for an Act to amend the Insurance Act 1973, and for related
purposes
ISBN: 0642 459843
Contents
Australian Prudential Regulation Authority Act
1998 58
Australian Securities and Investments Commission Act
2001 58
Corporations Act
2001 58
Financial Sector (Collection of Data) Act
2001 59
Financial Transactions Reports Act
1988 59
Insurance Acquisitions and Takeovers Act
1991 59
Seafarers Rehabilitation and Compensation Act
1992 59
A Bill for an Act to amend the Insurance Act 1973,
and for related purposes
The Parliament of Australia enacts:
This Act may be cited as the General Insurance Reform Act
2001.
(1) Subject to this section, this Act commences on the day on which it
receives the Royal Assent.
(2) Schedules 1 and 3 to this Act commence, or are taken to have
commenced, on 1 July 2002.
Subject to section 2, each Act that is specified in a Schedule to
this Act is amended or repealed as set out in the applicable items in the
Schedule concerned, and any other item in a Schedule to this Act has effect
according to its terms.
1 After section 2
Insert:
(1) The main object of this Act is to protect the interests of
policyholders and prospective policyholders under insurance policies (issued by
general insurers and Lloyd’s underwriters) in ways that are consistent
with the continued development of a viable, competitive and innovative insurance
industry.
(2) This Act, and the prudential standards determined by APRA under this
Act, achieve this mainly by:
(a) restricting who can carry on insurance business in Australia by
requiring general insurers, and the directors and senior management of general
insurers, to meet certain suitability requirements; and
(b) imposing primary responsibility for protecting the interests of
policyholders on the directors and senior management of general insurers;
and
(c) imposing on general insurers requirements to promote prudent
management of their insurance business (including requirements concerning
capital adequacy, the valuation of liabilities, reinsurance arrangements and the
effectiveness of risk management strategies and techniques); and
(d) providing for the prudential supervision of general insurers by
APRA.
(3) Generally, the provisions of this Act apply to general insurers.
However, there are a number of special provisions that apply only to
Lloyd’s underwriters.
2 Subsection 3(1) (definition of
actuary)
Repeal the definition.
3 Subsection 3(1)
Insert:
authorised NOHC means a body corporate:
(a) authorised under section 18; and
(b) that is a NOHC of a general insurer or general insurers.
4 Subsection 3(1) (definition of bank
or banker)
Repeal the definition.
5 Subsection 3(1) (definition of floating
charge)
Repeal the definition.
6 Subsection 3(1)
Insert:
foreign general insurer means a general insurer
who:
(a) is a foreign corporation within the meaning of paragraph 51(xx) of the
Constitution; and
(b) is authorised to carry on insurance business in a foreign
country.
7 Subsection 3(1)
Insert:
general insurer has the meaning given by section 11 and
includes a foreign general insurer.
8 Subsection 3(1)
Insert:
NOHC authorisation has the meaning given by
section 18.
9 Subsection 3(1)
Insert:
NOHC or non-operating holding company, in
relation to a body corporate, means a body corporate:
(a) of which the first body corporate is a subsidiary; and
(b) that does not carry on a business (other than a business consisting of
the ownership or control of other bodies corporate); and
(c) that is incorporated in Australia.
10 Subsection 3(1) (definition of outstanding
claims provision)
Repeal the definition.
11 Subsection 3(1) (definition of
premium)
Repeal the definition.
12 Subsection 3(1)
Insert:
prudential matters, concerning a general insurer, authorised
NOHC or a subsidiary of a general insurer or authorised NOHC, means matters
relating to:
(a) the conduct by the insurer, NOHC or subsidiary of any of its affairs
in such a way as:
(i) to keep itself in a sound financial position; or
(ii) not to cause or promote instability in the Australian financial
system; or
(b) the conduct by the insurer, NOHC or subsidiary of any of its affairs
with integrity, prudence and professional skill.
13 Subsection 3(1)
Insert:
prudential standard means a standard determined by APRA under
section 32.
14 Subsection 3(1)
Insert:
senior manager of a general insurer means a person who has or
exercises any of the senior management responsibilities (within the meaning of
the prudential standards) for the insurer.
15 Subsection 3(1)
Insert:
subsidiary has the meaning given by section 4.
16 Subsection 3(1) (definition of supervised
body corporate)
Repeal the definition.
17 At the end of
section 3
Add:
(4) A reference in this Act to a general insurer having no liabilities in
respect of insurance business carried on by it in Australia includes a reference
to a general insurer who has assigned, other than by an equitable assignment,
all of its interests (including rights and benefits) under all contracts of
insurance in respect of insurance business carried on by it in Australia to
another general insurer.
18 Section 3A
Repeal the section.
19 Section 4
Omit “bodies corporate are related to each other”, substitute
“a body corporate is a subsidiary of another body
corporate”.
Note: The heading to section 4 is replaced by the
heading “Meaning of subsidiary”.
20 Subsections 5(2) to (4)
Repeal the subsections, substitute:
(2) This Act does not apply to or with respect to insurance business
carried on by:
(a) the Commonwealth (including the Territories); or
(b) a body corporate prescribed by the regulations; or
(c) a body corporate, being insurance business of a kind prescribed by the
regulations.
21 Sections 6 and 7
Repeal the sections, substitute:
This Act extends to every external Territory.
(1) APRA may determine that all or specified provisions of this Act do not
apply to a person while the determination is in force.
(2) The determination may:
(a) be expressed to apply to a particular person or to a class of persons;
and
(b) specify the period during which the determination is in force;
and
(c) be made subject to specified conditions.
(3) A copy of the determination must be published in the Gazette
and, on Gazette publication, has effect according to its terms.
(4) APRA may, by determination published in the Gazette, vary or
revoke a determination under this section.
(1) A person commits an offence if:
(a) the person does an act or fails to do an act; and
(b) doing the act or failing to do the act results in a breach of a
condition to which a determination in force under subsection 7(1) is subject;
and
(c) the determination applies to the person.
Maximum penalty: 60 penalty units.
(2) An offence against this section is an offence of strict
liability.
Note 1: For strict liability, see
section 6.1 of the Criminal Code.
Note 2: Chapter 2 of the Criminal Code sets out
the general principles of criminal responsibility.
Note 3: If a body corporate is convicted of an offence
against this section, subsection 4B(3) of the Crimes Act 1914 allows a
court to impose a fine of up to 5 times the penalty above.
22 Part III
Repeal the Part, substitute:
(1) A person commits an offence if:
(a) the person carries on insurance business in Australia; and
(b) the person is not a body corporate or a Lloyd’s underwriter;
and
(c) there is no determination in force under subsection 7(1) that this
subsection does not apply to the person (the effect of which is to allow the
person to carry on insurance business without being authorised under the Act to
do so).
Maximum penalty: 60 penalty units.
(2) An offence against subsection (1) is an offence of strict
liability.
Note 1: For strict liability, see
section 6.1 of the Criminal Code.
Note 2: Chapter 2 of the Criminal Code sets out
the general principles of criminal responsibility.
(1) A body corporate commits an offence if:
(a) the body corporate carries on insurance business in Australia;
and
(b) the body corporate is not a general insurer; and
(c) there is no determination in force under subsection 7(1) that this
subsection does not apply to the body corporate (the effect of which is to
exempt the body corporate from being authorised under the Act to carry on
insurance business).
Maximum penalty: 60 penalty units.
(2) A Lloyd’s underwriter commits an offence if:
(a) the underwriter carries on any insurance business in Australia;
and
(b) the underwriter does so at any time after section 93 has ceased
to have effect; and
(c) there is no determination in force under subsection 7(1) that this
subsection does not apply to the underwriter (the effect of which is to exempt
the underwriter from being authorised under the Act to carry on insurance
business).
Maximum penalty: 60 penalty units.
(3) An offence against this section is an offence of strict
liability.
Note 1: For strict liability, see
section 6.1 of the Criminal Code.
Note 2: Chapter 2 of the Criminal Code sets out
the general principles of criminal responsibility.
Note 3: If a body corporate is convicted of an offence
against this section, subsection 4B(3) of the Crimes Act 1914 allows a
court to impose a fine of up to 5 times the penalty above.
A general insurer is a body corporate that is authorised
under section 12 to carry on insurance business in Australia.
Note: General insurer includes a foreign general insurer
(see the definition of foreign general insurer in subsection
3(1)).
(1) A body corporate may apply, in the approved form, to APRA for an
authorisation to carry on insurance business in Australia.
Note 1: The approved form may, for example, require
information or documents to be supported by a statutory
declaration.
Note 2: The body corporate may also need to consider the
implications of the Foreign Acquisitions and Takeovers Act 1975, the
Financial Sector (Shareholdings) Act 1998 and the Insurance
Acquisitions and Takeovers Act 1991.
(2) APRA may authorise an applicant to carry on insurance business in
Australia. The authorisation must be in writing.
(3) Without limiting the circumstances in which APRA may refuse an
application, APRA may refuse an application if the applicant is a subsidiary of
a NOHC that is not an authorised NOHC.
(4) If APRA authorises an applicant, APRA must:
(a) give written notice to the applicant; and
(b) ensure that notice of the authorisation is published in the
Gazette.
(5) The taking of an action is not invalid merely because of a failure to
comply with subsection (4).
(6) Part VI applies to a refusal of APRA to authorise an applicant
under this section.
(1) APRA may, at any time, by giving written notice to a general
insurer:
(a) impose conditions, or additional conditions, on the insurer’s
authorisation under section 12; or
(b) vary or revoke conditions imposed on the insurer’s authorisation
under section 12.
The conditions must relate to prudential matters.
(2) A condition may be expressed to have effect despite anything in the
prudential standards.
(3) Without limiting the conditions that APRA may impose on an
authorisation, APRA may make the authorisation conditional on a body corporate,
of which the general insurer is a subsidiary, being an authorised
NOHC.
(4) If APRA imposes, varies or revokes the conditions on a general
insurer’s authorisation, APRA must:
(a) give written notice to the insurer; and
(b) ensure that notice that the action has been taken is published in the
Gazette.
(5) The taking of an action is not invalid merely because of a failure to
comply with subsection (4).
(1) A general insurer commits an offence if:
(a) the insurer does an act or fails to do an act; and
(b) doing the act or failing to do the act results in a contravention of a
condition of the insurer’s authorisation under section 12;
and
(c) there is no determination in force under subsection 7(1) that this
subsection does not apply to the insurer.
Maximum penalty: 60 penalty units.
(2) An offence against this section is an offence of strict
liability.
Note 1: For strict liability, see
section 6.1 of the Criminal Code.
Note 2: Chapter 2 of the Criminal Code sets out
the general principles of criminal responsibility.
Note 3: If a body corporate is convicted of an offence
against this section, subsection 4B(3) of the Crimes Act 1914 allows a
court to impose a fine of up to 5 times the penalty above.
(1) APRA may revoke (in writing) a general insurer’s authorisation
under section 12 if APRA is satisfied that the insurer has no liabilities
in respect of insurance business carried on by it in Australia and
that:
(a) the insurer has failed to comply with:
(i) a requirement of this Act (including the requirement to comply with
the prudential standards) or of an instrument made for the purposes of this Act;
or
(ii) a requirement of the Financial Sector (Collection of Data) Act
2001; or
(iii) a direction to the insurer under this Act; or
(iv) a condition of the insurer’s authorisation; or
(b) it would be contrary to the national interest for the authorisation to
remain in force; or
(c) the insurer has failed to pay:
(i) an amount of levy or late penalty to which the Financial
Institutions Supervisory Levies Collection Act 1998 applies; or
(ii) an amount of charge fixed under section 51 of the Australian
Prudential Regulation Authority Act 1998; or
(d) the insurer is insolvent and is unlikely to return to solvency within
a reasonable period of time; or
(e) the insurer has inadequate capital and is unlikely to have adequate
capital within a reasonable period of time; or
(f) the insurer has ceased to carry on insurance business in
Australia.
(2) However, APRA may only revoke a general insurer’s authorisation
if APRA has the Treasurer’s written agreement to do so.
(3) Before revoking a general insurer’s authorisation, APRA must
give written notice to the insurer advising it that:
(a) APRA is considering revoking the authorisation for the reasons
specified; and
(b) the insurer may make submissions about the revocation to APRA, in
accordance with the notice, by a specified date (which must be at least 90 days
after the notice is given).
APRA must consider any submissions made by the insurer by that
date.
(4) APRA may, with the Treasurer’s written agreement, decide that
subsection (3) does not apply if APRA is satisfied that complying with that
subsection could result in a delay in revocation that would be contrary to the
national interest.
(5) If APRA revokes a general insurer’s authorisation, APRA
must:
(a) give written notice to the insurer; and
(b) ensure that notice of the revocation is published in the
Gazette.
(6) A revocation is not invalid merely because of a failure to comply with
subsection (5).
(1) APRA must revoke (in writing) a general insurer’s authorisation
under section 12 if:
(a) the insurer asks (in writing) APRA to do so; and
(b) APRA is satisfied that:
(i) the insurer has no liabilities in respect of insurance business
carried on by it in Australia; and
(ii) revoking the authorisation would not be contrary to the national
interest.
(2) If APRA revokes a general insurer’s authorisation, APRA
must:
(a) give written notice to the insurer; and
(b) ensure that notice of the revocation is published in the
Gazette.
(3) A revocation is not invalid merely because of a failure to comply with
subsection (2).
(1) If APRA considers that it would, under section 15, revoke a
general insurer’s authorisation if the insurer had no liabilities in
respect of insurance business carried on by it in Australia, APRA may direct the
insurer to:
(a) arrange to assign those liabilities to one or more other general
insurers; and
(b) ask APRA to approve the proposed assignment.
The insurer must comply with the direction within the period specified in
the direction.
(2) A general insurer who has asked APRA for a revocation under
section 16 may, for the purpose of obtaining the revocation:
(a) arrange to assign to one or more other general insurers its
liabilities in respect of insurance business carried on by it in Australia;
and
(b) ask APRA to approve the proposed assignment.
Note: The body corporate may also need to consider the
implications of the Insurance Acquisitions and Takeovers Act
1991.
(3) A general insurer must not assign its liabilities under this section,
and a purported assignment under this section is of no effect, unless the
assignment is approved by APRA under subsection (4).
(4) APRA may only approve a proposed assignment of a general
insurer’s liabilities under this section if APRA is satisfied that the
assignment is appropriate, having regard to:
(a) the interests of the insurer’s policyholders; and
(b) the interests of the policyholders of the general insurer or insurers
to whom the liabilities are to be assigned; and
(c) the national interest; and
(d) any other matter APRA considers relevant.
The approval must be in writing and may be made subject to specified
conditions.
(5) If APRA approves an assignment, the general insurer must:
(a) comply with the conditions on the approval; and
(b) give reasonable notice (in writing) of the assignment to the
insurer’s policyholders; and
(c) give APRA such written evidence of the assignment as APRA reasonably
requires.
(6) An assignment of liabilities under this section may include the
assignment of any rights or benefits in connection with contracts of insurance
in respect of the insurance business carried on in Australia by the general
insurer concerned.
(7) A direction under subsection (1) has effect despite anything in
the Insurance Acquisitions and Takeovers Act 1991.
(1) A body corporate may apply, in the approved form, to APRA for an
authorisation (a NOHC authorisation) under this section. The
authorisation operates as an authorisation in relation to the body corporate and
any general insurers that are subsidiaries of the body corporate from time to
time.
Note 1: The body corporate may want the authority because
APRA may refuse to grant a subsidiary of the body corporate a section 12
authorisation unless the body corporate holds a NOHC authorisation (see
subsection 12(3)).
Note 2: The approved form may, for example, require
information or documents to be supported by a statutory
declaration.
Note 3: The body corporate may also need to consider the
implications of the Foreign Acquisitions and Takeovers Act 1975, the
Financial Sector (Shareholdings) Act 1998 and the Insurance
Acquisitions and Takeovers Act 1991.
(3) APRA may authorise an applicant if it considers it is appropriate to
do so. The authorisation must be in writing.
(4) If APRA authorises an applicant, APRA must:
(a) give written notice to the applicant; and
(b) ensure that notice of the authorisation is published in the
Gazette.
(5) The taking of an action is not invalid merely because of a failure to
comply with subsection (4).
(6) Part VI applies to a refusal of APRA to authorise an applicant
under this section.
(1) APRA may, at any time, by giving written notice to an authorised
NOHC:
(a) impose conditions, or additional conditions, on the NOHC
authorisation; and
(b) vary or revoke conditions imposed on the NOHC authorisation.
The conditions must relate to prudential matters.
(2) A condition may be expressed to have effect despite anything in the
prudential standards.
(3) If APRA imposes, varies or revokes the conditions on a NOHC
authorisation, APRA must:
(a) give written notice to the authorised NOHC; and
(b) ensure that notice of the imposition, variation or revocation of the
conditions is published in the Gazette.
(4) The taking of an action is not invalid merely because of a failure to
comply with subsection (3).
(1) An authorised NOHC commits an offence if:
(a) the NOHC does an act or fails to do an act; and
(b) doing the act or failing to do the act results in a contravention of a
condition of the NOHC authorisation; and
(c) there is no determination in force under subsection 7(1) that this
subsection does not apply to the NOHC.
Maximum penalty: 60 penalty units.
(2) An offence against this section is an offence of strict
liability.
Note 1: For strict liability, see
section 6.1 of the Criminal Code.
Note 2: Chapter 2 of the Criminal Code sets out
the general principles of criminal responsibility.
Note 3: If a body corporate is convicted of an offence
against this section, subsection 4B(3) of the Crimes Act 1914 allows a
court to impose a fine of up to 5 times the penalty above.
(1) APRA may revoke, in writing, a NOHC authorisation if APRA is satisfied
that:
(a) the authorised NOHC has failed to comply with:
(i) a requirement of this Act (including the requirement to comply with
the prudential standards) or of an instrument made for the purposes of this Act;
or
(ii) a requirement of the Financial Sector (Collection of Data) Act
2001; or
(iii) a direction to the authorised NOHC under this Act; or
(iv) a condition of the authorisation; or
(b) it would be contrary to the national interest for the authorisation to
remain in force; or
(c) the authorised NOHC has failed to pay:
(i) an amount of levy or late penalty to which the Financial
Institutions Supervisory Levies Collection Act 1998 applies; or
(ii) an amount of charge fixed under section 51 of the Australian
Prudential Regulation Authority Act 1998; or
(d) it would be contrary to the interests of the policyholders of any
general insurer who is a subsidiary of the authorised NOHC for the authorisation
to remain in force; or
(e) the authorised NOHC has ceased to be a NOHC of any general
insurer.
(2) However, APRA may only revoke a NOHC authorisation if APRA has the
Treasurer’s written agreement to do so.
(3) Before revoking a NOHC authorisation, APRA must give written notice to
the authorised NOHC advising it that:
(a) APRA is considering revoking the authorisation for the reasons
specified; and
(b) the authorised NOHC may make submissions about the revocation to APRA,
in accordance with the notice, by a specified date (which must be at least 90
days after the notice is given).
APRA must consider any submissions made by the authorised NOHC by that
date.
(4) APRA may, with the Treasurer’s written agreement, decide that
subsection (3) does not apply if APRA is satisfied that complying with that
subsection could result in a delay in revocation that would be:
(a) contrary to the national interest; or
(b) contrary to the interests of the policyholders of any general insurer
who is a subsidiary of the authorised NOHC concerned.
(5) If APRA revokes a body corporate’s NOHC authorisation, APRA
must:
(a) give written notice to the body corporate; and
(b) ensure that notice of the revocation is published in the
Gazette.
(6) A revocation is not invalid merely because of a failure to comply with
subsection (5).
(1) APRA must revoke (in writing) a body corporate’s NOHC
authorisation if:
(a) the body corporate asks (in writing) APRA to do so; and
(b) APRA is satisfied that revoking the authorisation would not be
contrary to either:
(i) the national interest; or
(ii) the interests of the policyholders of any general insurer who is a
subsidiary of the body corporate.
(2) If APRA revokes a body corporate’s NOHC authorisation, APRA
must:
(a) give written notice to the body corporate; and
(b) ensure that notice of the revocation is published in the
Gazette.
(3) A revocation is not invalid merely because of a failure to comply with
subsection (2).
APRA may, from time to time, cause a list of authorised NOHCs to be
published in the Gazette or in any other way that APRA considers
appropriate.
(1) A disqualified person must not be or act as:
(a) a director or senior manager of a general insurer (other than a
foreign general insurer); or
(b) a senior manager, or agent in Australia for the purpose of
section 118, of a foreign general insurer; or
(c) a director or senior manager of an authorised NOHC.
(2) A person commits an offence if the person contravenes
subsection (1).
Maximum penalty: Imprisonment for 2 years.
(3) A person commits an offence if the person contravenes
subsection (1). This is an offence of strict liability.
Maximum penalty: 60 penalty units.
(4) A body corporate must not allow a disqualified person to be or act
as:
(a) if the body corporate is a general insurer (other than a foreign
general insurer)—a director or senior manager of the insurer; or
(b) if the body corporate is a foreign general insurer—a senior
manager, or agent in Australia for the purpose of section 118, of the
insurer; or
(c) if the body corporate is an authorised NOHC—a director or senior
manager of the NOHC.
(5) A body corporate commits an offence if it contravenes
subsection (4).
Maximum penalty: 250 penalty units.
(6) A body corporate commits an offence if it contravenes
subsection (4). This is an offence of strict liability.
Maximum penalty: 60 penalty units.
(7) In a prosecution under subsection (5), it is a defence if the
defendant:
(a) contacted APRA within a reasonable period before allowing the person
to be or act as a director, senior manager or agent (as the case may be);
and
(b) was advised by APRA that the person was not a disqualified
person.
Note: A defendant bears an evidential burden in relation to
the matters in this subsection (see section 13.3(3) of the Criminal
Code).
(8) A failure to comply with this section does not affect the validity of
an appointment or transaction.
Note 1: For strict liability, see
section 6.1 of the Criminal Code.
Note 2: Chapter 2 of the Criminal Code sets out
the general principles of criminal responsibility.
Note 3: If a body corporate is convicted of an offence
against this section, subsection 4B(3) of the Crimes Act 1914 allows a
court to impose a fine of up to 5 times the penalty above.
(1) A person is a disqualified person if, at any
time:
(a) the person has been convicted of an offence against or arising out of
this Act or the Financial Sector (Collection of Data) Act 2001;
or
(b) the person has been convicted of an offence against or arising out of
a law in force in Australia, or the law of a foreign country, if the offence
concerns dishonest conduct or conduct relating to a financial sector company
(within the meaning of the Financial Sector (Shareholdings) Act 1998);
or
(c) the person has been or becomes bankrupt; or
(d) the person has applied to take the benefit of a law for the relief of
bankrupt or insolvent debtors; or
(e) the person has compounded with his or her creditors.
Note: APRA may determine that a person is not a disqualified
person (see section 26).
(2) A reference in subsection (1) to a person who has been convicted
of an offence includes a reference to a person in respect of whom an order has
been made relating to the offence under:
(a) section 19B of the Crimes Act 1914; or
(b) a corresponding provision of a law of a State, a Territory or a
foreign country.
(3) Nothing in this section affects the operation of Part VIIC of the
Crimes Act 1914 (which includes provisions that, in certain
circumstances, relieve persons from the requirement to disclose spent
convictions and require persons aware of such convictions to disregard
them).
(1) Despite section 25, APRA may determine (in writing) that a person
is not a disqualified person. APRA may do so on its own initiative
or on the application of the person.
(2) However, APRA may only make the determination if it is satisfied that
the person is highly unlikely to be a prudential risk to any general insurer or
authorised NOHC.
(3) The determination takes effect on the day on which it is made and APRA
must as soon as practicable give a copy of the determination to the person
concerned and to any affected general insurer or authorised NOHC.
(4) If a person applies for a determination under this section, APRA
must:
(a) either make, or refuse to make, the determination; and
(b) give the person written notice of the decision including, in the case
of a refusal, the reasons for the refusal.
(5) APRA may revoke a determination under this section by giving written
notice to the person concerned and must give a copy of the notice to any
affected general insurer or authorised NOHC.
(6) Part VI applies to a refusal of APRA to make a determination
under this section.
(1) This section applies to a person who is:
(a) a director or senior manager of a general insurer (not including a
foreign general insurer); or
(b) a senior manager, or agent in Australia for the purpose of
section 118, of a foreign general insurer; or
(c) a director or senior manager of an authorised NOHC.
(2) APRA may direct (in writing) that the general insurer or authorised
NOHC remove the person from the position if APRA is satisfied that the
person:
(a) is a disqualified person; or
(b) does not meet one or more of the criteria for fitness and propriety
set out in the prudential standards.
(3) Before directing a general insurer or authorised NOHC to remove a
person, APRA must give written notice to:
(a) the person; and
(b) the insurer or NOHC;
giving each of them a reasonable opportunity to make submissions on the
matter.
(4) A direction takes effect on the day specified in it, which must be at
least 7 days after it is made.
(5) If APRA directs a general insurer or authorised NOHC to remove a
person, APRA must give a copy of the direction to the person and insurer or
NOHC.
(6) Part VI applies to a direction made by APRA under this
section.
A general insurer commits an offence if:
(a) it does not hold assets in Australia (excluding goodwill and any other
amount excluded by the prudential standards for the purposes of this section) of
a value that is equal to or greater than the total amount of its liabilities in
Australia; and
(b) APRA has not authorised the insurer to hold assets of a lesser value;
and
(c) there is no determination in force under subsection 7(1) determining
that this subsection does not apply to the insurer.
Maximum penalty: 200 penalty units.
Note 1: Certain amounts are taken to be assets in Australia,
and certain liabilities are taken to be liabilities in Australia, under
section 116A.
Note 2: Chapter 2 of the Criminal Code sets out
the general principles of criminal responsibility.
Note 3: If a body corporate is convicted of an offence
against this section, subsection 4B(3) of the Crimes Act 1914 allows a
court to impose a fine of up to 5 times the penalty above.
(1) A general insurer who changes its name must place a notice in a daily
newspaper or newspapers circulating generally in each State or Territory in
which the insurer carries on insurance business.
(2) The notice must state the old and new names of the insurer and when
the change took effect.
(3) If APRA is satisfied that a general insurer or authorised NOHC has
changed its name, APRA must ensure that notice of that fact is published in the
Gazette (whether or not the insurer has also placed a notice under
subsection (1)).
(4) The authorisation of the insurer under section 12, or NOHC under
section 18, (as the case may be) has effect after the Gazette
publication as if it had been given under the changed name.
(1) If APRA is satisfied that a general insurer or authorised NOHC has
ceased to exist, APRA must ensure that notice of that fact is published in the
Gazette.
(2) The authorisation under section 12 or 18 (as the case may be) of
the insurer or NOHC is taken to be revoked when the Gazette notice is
published.
Nothing in this Part authorises the carrying on by a body corporate of
any business that it would not otherwise have been authorised to carry
on.
(1) APRA may determine (in writing) standards (prudential
standards) relating to prudential matters that must be complied with
by:
(a) all general insurers; or
(b) all authorised NOHCs; or
(c) the subsidiaries of general insurers or authorised NOHCs; or
(d) a specified class of general insurers, authorised NOHCs or
subsidiaries of general insurers or authorised NOHCs.
(2) A prudential standard may impose different requirements to be complied
with:
(a) by different classes of general insurers, authorised NOHCs, or
subsidiaries of general insurers or authorised NOHCs; or
(b) in different situations; or
(c) in respect of different activities.
(3) In making a prudential standard, APRA must have regard to good
commercial practice and the burden, in complying with the requirements of the
standard, that would be imposed on:
(a) general insurers; or
(b) authorised NOHCs; or
(c) the subsidiaries of general insurers or authorised NOHCs.
(4) A prudential standard takes effect on the day on which the
determination of the standard is made or such later day as is specified in the
determination.
(5) A determination of a prudential standard, or a variation or revocation
of a prudential standard, is a disallowable instrument for the purposes of
section 46A of the Acts Interpretation Act 1901.
(1) Before making or varying a prudential standard APRA must
consult:
(a) the general insurers or authorised NOHCs to whom the standard applies
or will apply; and
(b) if the standard applies or will apply to subsidiaries of general
insurers or authorised NOHCs—those insurers or NOHCs.
(2) APRA may also consult with such associations or other bodies
representing the insurers, NOHCs or subsidiaries as APRA considers
appropriate.
(3) If APRA is satisfied that the delay involved in undertaking
consultation under subsection (1) would materially prejudice the interests
of the policyholders of any general insurers, APRA may, with the
Treasurer’s written agreement, decide that subsection (1) does not
apply.
(4) APRA is not required to consult on a variation of a prudential
standard if the variation is only of a minor technical nature.
(5) A prudential standard is not invalid merely because of a failure to
comply with this section.
(1) APRA must ensure that a notice is published in the Gazette as
soon as practicable after APRA makes, varies or revokes a prudential
standard.
(2) The notice must:
(a) specify whether APRA made, varied or revoked a prudential standard;
and
(b) in the case of the making or varying of a prudential
standard—summarise the purpose and effect of the prudential standard or
variation.
(3) APRA must take reasonable steps to ensure that copies of the current
text of the prudential standards are available for inspection and
purchase.
(4) An action is not invalid merely because of a failure to comply with
this section.
A general insurer, authorised NOHC or a subsidiary of a general insurer
or authorised NOHC to whom a prudential standard applies must comply with the
standard.
(1) If APRA is satisfied that a general insurer, authorised NOHC or a
subsidiary of a general insurer or authorised NOHC:
(a) has breached a prudential standard; or
(b) is likely to breach a prudential standard in a way that is likely to
give rise to a prudential risk;
APRA may (in writing) direct the insurer, NOHC or subsidiary to comply with
all or a part of the standard within a specified time.
(2) The general insurer, authorised NOHC or subsidiary must comply with
the direction despite anything in its constitution or in any contract or
arrangement to which it is a party.
(3) APRA may revoke a direction that APRA considers is no longer necessary
or appropriate by giving written notice to the insurer, NOHC or subsidiary
concerned.
(1) A general insurer commits an offence if the insurer contravenes a
direction given to it under section 36 to comply with all or a part of a
prudential standard within a specified time.
Maximum penalty: 60 penalty units.
(2) An authorised NOHC commits an offence if the authorised NOHC
contravenes a direction given to it under section 36 to comply with all or
a part of a prudential standard within a specified time.
Maximum penalty: 60 penalty units.
(3) A subsidiary of a general insurer or authorised NOHC commits an
offence if the subsidiary contravenes a direction given to it under
section 36 to comply with all or a part of a prudential standard within a
specified time.
Maximum penalty: 60 penalty units.
(4) An offence against this section is an offence of strict
liability.
Note 1: For strict liability, see
section 6.1 of the Criminal Code.
Note 2: Chapter 2 of the Criminal Code sets out
the general principles of criminal responsibility.
Note 3: If a body corporate is convicted of an offence
against this section, subsection 4B(3) of the Crimes Act 1914 allows a
court to impose a fine of up to 5 times the penalty above.
The functions of APRA include:
(a) collecting and analysing information on prudential matters concerning
general insurers, authorised NOHCs and the subsidiaries of general insurers and
authorised NOHCs; and
(b) encouraging and promoting the carrying out of sound practices in
relation to prudential matters by general insurers, authorised NOHCs and the
subsidiaries of general insurers and authorised NOHCs; and
(c) evaluating the effectiveness and carrying out of those
practices.
23 Part IV
Repeal the Part, substitute:
(1) A general insurer must have:
(a) an auditor appointed by the insurer; and
(b) an actuary appointed by the insurer.
Note: A general insurer may be given an exemption from the
requirement to have an actuary (see section 47).
(2) Within 6 weeks after a person stops being the appointed auditor or
actuary of a general insurer, the general insurer must appoint another person to
be its auditor or actuary.
(3) A person may only hold an appointment as an auditor or actuary of a
general insurer if:
(a) APRA has approved the appointment under section 40; and
(b) the approval is current.
(4) An appointment of a person as a general insurer’s auditor or
actuary cannot take effect while an appointment of another person in that
position is current.
(1) A general insurer may request in writing that APRA approve:
(a) the appointment of a person as the general insurer’s auditor;
or
(b) the appointment of a person as the general insurer’s
actuary.
(2) APRA can only approve an appointment of a person as a general
insurer’s auditor or actuary if:
(a) APRA is satisfied that the person meets the eligibility criteria for
such an appointment set out in the prudential standards; and
(b) there is no determination current under section 44 disqualifying
the person from holding such an appointment.
(3) APRA must give the insurer notice of its decision:
(a) to approve the person’s appointment; or
(b) to refuse to approve the person’s appointment, including the
reasons for the refusal.
(4) Part VI applies to a refusal of APRA to approve a person’s
appointment.
An auditor or actuary appointed by a general insurer must comply with the
prudential standards in performing his or her duties or exercising his or her
powers.
(1) APRA may revoke an approval of a person’s appointment under
section 40 if APRA is satisfied that the person:
(a) has failed to perform adequately and properly the functions and duties
of the appointment under this Act or the prudential standards; or
(b) does not meet one or more of the criteria for fitness and propriety
set out in the prudential standards.
(2) The revocation must be in writing and takes effect on the day
on which it is made.
(3) APRA must give a copy of the revocation to the person and to the
general insurer who made the appointment.
(4) Part VI applies to a revocation under this section.
A person stops holding an appointment as a general insurer’s
auditor or actuary if:
(a) the person no longer meets the eligibility criteria for such an
appointment set out in the prudential standards; or
(b) the approval of the person’s appointment is revoked under
section 42; or
(c) a determination under section 44 takes effect disqualifying the
person from holding such an appointment; or
(d) the person resigns the appointment by giving written notice to the
insurer; or
(e) the insurer ends the appointment by giving written notice to the
person.
(1) APRA may determine (in writing) that:
(a) a person is disqualified from holding any appointment as an auditor of
a general insurer; or
(b) a person is disqualified from holding any appointment as an actuary of
a general insurer.
(2) APRA may only do so if the person:
(a) has failed to perform adequately and properly the functions and duties
of such an appointment under this Act or the prudential standards; or
(b) otherwise does not meet one or more of the criteria for fitness and
propriety set out in the prudential standards.
(3) A determination takes effect on the day specified in it. That day must
be no more than 28 days after the determination is made.
(4) As soon as practicable after making a determination disqualifying a
person, APRA must give a copy of the determination to the person and any
affected general insurer.
(5) Part VI applies to a determination made by APRA under this
section.
(1) APRA may revoke (in writing) a determination under section 44
disqualifying a person on its own initiative or on the application of the
person.
(2) If a person applies for a determination to be revoked, APRA
must:
(a) either revoke, or refuse to revoke, the determination; and
(b) give the person written notice of the decision.
(3) APRA must not revoke a determination disqualifying a person unless it
is satisfied that the person:
(a) is likely to carry out and perform adequately and properly the
functions and duties of an appointed auditor or actuary (as the case may be)
under this Act and the prudential standards; and
(b) meets all of the criteria for fitness and propriety set out in the
prudential standards.
(4) As soon as practicable after revoking a determination, APRA must give
a copy of the revocation to the person to whom it relates.
(5) If APRA refuses to revoke a determination, APRA must give written
notice of the refusal, including the reasons for the refusal, to the person
concerned.
(6) Part VI applies to a refusal of APRA to revoke a determination
under this section.
(1) Within 14 days after a general insurer appoints a person as its
auditor or actuary, the insurer must give APRA written notice of these
matters:
(a) the person’s name;
(b) details of the person’s qualifications and experience;
(c) the date of the appointment;
(d) any other matter specified for the purposes of this section by the
prudential standards.
(2) Within 14 days after a person stops being the appointed auditor or
actuary of a general insurer, the insurer must give APRA written notice of that
event (including the date on which it happened).
(1) APRA may determine in writing that one or more general insurers is
exempt from the requirement under paragraph 40(1)(b) to appoint an
actuary.
(2) APRA must give a copy of a determination to each general insurer to
whom it applies.
(3) The prudential standards may specify that a class of general insurers
is exempt from the requirement in paragraph 40(1)(b) to appoint an
actuary.
(1) This section applies if APRA:
(a) revokes under section 42 its approval of a person’s
appointment as an auditor or actuary of a general insurer; or
(b) makes a determination under section 44 disqualifying a person
from holding an appointment as an auditor or actuary of a general
insurer.
(2) APRA may refer details of the matter to the following:
(a) the Companies Auditors and Liquidators Disciplinary Board established
by Division 1 of Part 11 of the Australian Securities and
Investments Commission Act 1989;
(b) those members of the professional association of the auditor or
actuary whom APRA believes will be involved in considering or taking any
disciplinary or other action concerning the matter against the auditor or
actuary.
(3) When APRA refers the details of a matter, APRA must also give written
notice of the referral, including the nature of the matter, to the auditor or
actuary.
(1) APRA may give written notice to a person who is or was an auditor or
actuary of:
(a) a general insurer (whether or not the person was appointed under
section 39); or
(b) an authorised NOHC; or
(c) a subsidiary of a general insurer or authorised NOHC;
to give APRA information about the insurer, NOHC or subsidiary if APRA
considers that the provision of the information will assist APRA in performing
its functions under this Act.
(2) The person must comply with the notice and, in doing so, must not give
APRA information that is false or misleading.
(3) A person commits an offence if the person contravenes
subsection (2).
Maximum penalty: Imprisonment for 6 months, or 100 penalty units, or
both.
(4) A person commits an offence if the person contravenes
subsection (2). This is an offence of strict liability.
Maximum penalty: 60 penalty units.
Note 1: For strict liability, see
section 6.1 of the Criminal Code.
Note 2: Chapter 2 of the Criminal Code sets out
the general principles of criminal responsibility.
(1) This section applies to a person who is or was an auditor or actuary
of:
(a) a general insurer (whether or not the person was appointed under
section 39); or
(b) an authorised NOHC; or
(c) a subsidiary of a general insurer or authorised NOHC.
(2) If the person has reasonable grounds for believing that:
(a) the insurer, NOHC or subsidiary is insolvent, or there is a
significant risk that it will become insolvent; or
(b) the insurer, NOHC or subsidiary has failed to comply with the
prudential standards or:
(i) in the case of an insurer—the insurer has failed to comply with
a condition of its authorisation under section 12; or
(ii) in the case of an authorised NOHC—the NOHC has failed to comply
with a condition of its authorisation under section 18; or
(c) the insurer, NOHC or subsidiary has failed to comply with a
requirement or direction under this Act or a requirement under the Financial
Sector (Collection of Data) Act 2001; or
(d) an existing or proposed state of affairs may materially prejudice the
interests of:
(i) in the case of an auditor or actuary of a general insurer or of a
subsidiary of a general insurer—the insurer’s policyholders;
or
(ii) in the case of an auditor or actuary of an authorised NOHC or of a
subsidiary of an authorised NOHC—the policyholders of any general insurer
who is a subsidiary of the NOHC;
the person must give APRA information (in writing) about the matter unless
there is a determination in force under subsection 7(1) that this subsection
does not apply to the person.
(3) A person commits an offence if the person contravenes
subsection (2).
Maximum penalty: Imprisonment for 6 months, or 100 penalty units, or
both.
(4) A person commits an offence if the person contravenes
subsection (2). This is an offence of strict liability.
Maximum penalty: 60 penalty units.
Note 1: For strict liability, see
section 6.1 of the Criminal Code.
Note 2: Chapter 2 of the Criminal Code sets out
the general principles of criminal responsibility.
A person who is or was an auditor or actuary of:
(a) a general insurer (whether or not the person was appointed under
section 39); or
(b) an authorised NOHC; or
(c) a subsidiary of a general insurer or authorised NOHC;
may give information to APRA about the insurer, NOHC or subsidiary if the
person considers that giving the information will assist APRA in performing its
functions under this Act or the Financial Sector (Collection of Data) Act
2001.
A person who, in good faith and without negligence, gives information to
APRA in accordance with this Division is not subject to any action, claim or
demand by, or any liability to, any other person in respect of the
information.
(1) An individual is not excused from complying with a requirement under
section 49 or 49A to give information on the ground that doing so would
tend to incriminate the individual or make the individual liable to a
penalty.
(2) The information given by the individual in compliance with such a
requirement is not admissible in evidence against the individual in a criminal
proceeding or a proceeding for the imposition of a penalty, other than a
proceeding in respect of the falsity of the information, if:
(a) before giving the information, the individual claims that giving the
information might tend to incriminate the individual or make the individual
liable to a penalty; and
(b) giving the information might in fact tend to incriminate the
individual or make the individual liable to a penalty.
(1) APRA may give written notice to a general insurer requiring it to
appoint, at the insurer’s expense, an actuary (other than the actuary
appointed in accordance with section 39) to:
(a) investigate all or a specified part of the insurer’s liabilities
as at a particular time; and
(b) produce a written report.
Note: Only certain persons can be appointed as an actuary
for the purposes of this section (see section 49G).
(2) The actuary must not be an officer (within the meaning of the
Corporations Law) of the general insurer.
(3) Within 7 days after the general insurer is given the notice, it must
appoint the actuary and advise APRA (in writing) of the actuary’s
name.
(4) Within 7 days after being notified of an actuary’s name, APRA
may give written notice to the general insurer that the actuary is not
acceptable to APRA. The insurer must then, within 7 days:
(a) appoint a different actuary; and
(b) advise APRA (in writing) of the name of that actuary.
(5) Subsection (4) applies whether the notification of the
actuary’s name is under subsection (3) or
paragraph (4)(b).
(6) The general insurer must ensure that the actuary’s report is
given to APRA:
(a) within 30 days after APRA gave the notice under subsection (1)
requiring an actuary to be appointed; or
(b) within such further time as APRA allows in writing.
(7) The actuary’s report must be signed by the actuary and contain a
statement of the actuary’s opinion about each of the following:
(a) the adequacy of all or part of the amount specified in the general
insurer’s accounts in respect of its liabilities, and the amount that the
actuary considers would be adequate in the circumstances;
(b) the accuracy of any relevant valuations made by the actuary;
(c) the assumptions used by the actuary in making those
valuations;
(d) the relevance, appropriateness and accuracy of the information on
which those valuations were based;
(e) any other matter in respect of which the prudential standards require
a statement of the auditor’s opinion to be included in the
report.
(1) A general insurer commits an offence if:
(a) APRA requires the insurer to appoint an actuary under
section 49E; and
(b) the insurer:
(i) fails to do so within the time required by that section; or
(ii) if the insurer is required under subsection 49E(4) to appoint a
different actuary—fails to appoint that actuary within the time required
by that subsection.
Maximum penalty: 100 penalty units.
(2) A general insurer commits an offence if:
(a) APRA requires the insurer to appoint an actuary under
section 49E; and
(b) the insurer:
(i) fails to do so within the time required by that section; or
(ii) if the insurer is required under subsection 49E(4) to appoint a
different actuary—fails to appoint that actuary within the time required
by that subsection.
This is an offence of strict liability.
Maximum penalty: 60 penalty units.
Note 1: For strict liability, see
section 6.1 of the Criminal Code.
Note 2: Chapter 2 of the Criminal Code sets out
the general principles of criminal responsibility.
Note 3: If a body corporate is convicted of an offence
against this section, subsection 4B(3) of the Crimes Act 1914 allows a
court to impose a fine of up to 5 times the penalty above.
(1) A person can only be appointed as an actuary for the purposes of
section 49E if the person is ordinarily resident in Australia
and:
(a) the person is a Fellow of The Institute of Actuaries of Australia;
or
(b) APRA has approved (in writing) the person as an actuary for the
purposes of section 49E.
(2) APRA may only approve a person if APRA is satisfied that the person
has actuarial qualifications and experience that make the person fit to perform
the functions of an actuary for the purposes of section 49E.
(1) If a delegate of APRA decides to allow, or refuse to allow, further
time under paragraph 49E(6)(b), the general insurer concerned may request that
APRA reconsider the delegate’s decision.
(2) The request must:
(a) be in writing and include the reasons for making the request;
and
(b) be made within 21 days after the day on which the insurer is notified
of the decision.
(3) Within 21 days of receiving the request, APRA must reconsider the
decision and may confirm, revoke or vary the decision. APRA must give written
notice to the insurer of the result of the reconsideration.
(4) If APRA does not confirm, revoke or vary the decision before the end
of the 21 day period, APRA is taken to have confirmed the decision.
(1) The auditor of a general insurer appointed in accordance with
section 39 must:
(a) audit the insurer’s yearly statutory accounts; and
(b) perform for the insurer the functions of an auditor set out in the
prudential standards; and
(c) prepare, and give to the insurer, the reports (if any) required by the
prudential standards to be prepared by the auditor.
(2) The general insurer must make the arrangements that are necessary to
enable the auditor to do those things.
(3) The auditor must give the general insurer a certificate relating to
the yearly statutory accounts. The certificate must contain statements of the
auditor’s opinion on the matters required by the prudential standards to
be dealt with in the certificate.
(4) The reports that the prudential standards require the auditor to
prepare must deal with all of the matters required by the prudential standards
to be dealt with in the reports.
(1) The actuary of a general insurer appointed in accordance with
section 39 must:
(a) perform for the insurer the functions of an actuary set out in the
prudential standards; and
(b) prepare, and give to the insurer, the reports (if any) required by the
prudential standards to be prepared by the actuary.
(2) The general insurer must make the arrangements that are necessary to
enable the actuary to do those things.
(3) The reports that the prudential standards require the actuary to
prepare must deal with all of the matters required by the prudential standards
to be dealt with in the reports.
(1) A general insurer must, in accordance with the prudential standards,
lodge with APRA:
(a) a section 49J certificate relating to the yearly statutory
accounts for each financial year of the insurer; and
(b) the reports referred to in section 49K.
Maximum penalty: 60 penalty units.
(2) Subsection (1) is an offence of strict liability.
Note 1: For strict liability, see
section 6.1 of the Criminal Code.
Note 2: Chapter 2 of the Criminal Code sets out
the general principles of criminal responsibility.
Note 3: If a body corporate is convicted of an offence
against this section, subsection 4B(3) of the Crimes Act 1914 allows a
court to impose a fine of up to 5 times the penalty above.
(1) APRA may give a written direction to a general insurer to provide, or
further provide, in its accounts for the purposes of this Act (including the
prudential standards):
(a) a specified amount; or
(b) an amount determined in a specified way;
in respect of its liabilities.
(2) However, APRA may only give a direction if APRA has the
Treasurer’s written agreement to do so.
(3) The direction must specify:
(a) a period for providing the amount in its accounts (which must be at
least 21 days after the direction is given to the insurer); and
(b) whether it applies on an interim basis or otherwise.
(4) APRA may vary or revoke the direction, by giving written notice to the
general insurer, if:
(a) APRA considers that the direction should be varied or is no longer
necessary; and
(b) the Treasurer gives his or her written agreement.
APRA may do so on its own initiative or on the application of the
insurer.
(5) If a general insurer applies for a direction to be varied or revoked,
APRA must:
(a) either vary or revoke, or refuse to vary or revoke, the direction;
and
(b) give the person written notice of APRA’s decision about varying
or revoking the direction.
(6) A direction ceases to have effect on the commencement of the winding
up of the general insurer concerned.
(7) To avoid doubt, this section has effect for the purposes
of this Division, the prudential standards and the Financial Sector
(Collection of Data) Act 2001.
(1) If APRA is not satisfied that a general insurer has worked out the
value of an asset of the insurer in accordance with the prudential standards,
APRA may give a written direction to the insurer that the asset’s value is
instead the value specified in the direction.
(2) However, APRA may only give a direction if APRA has the
Treasurer’s written agreement to do so.
(3) APRA may vary or revoke the direction, by giving written notice to the
general insurer, if:
(a) APRA considers that the direction should be varied or is no longer
necessary; and
(b) the Treasurer gives his or her written agreement.
APRA may do so on its own initiative or on the application of the
insurer.
(4) If a general insurer applies for a direction to be varied or revoked,
APRA must:
(a) either vary or revoke, or refuse to vary or revoke, the direction;
and
(b) give the insurer written notice of APRA’s decision about varying
or revoking the direction.
(5) To avoid doubt, this section has effect for the purposes
of this Division, the prudential standards and the Financial Sector
(Collection of Data) Act 2001.
(1) A general insurer commits an offence if the insurer contravenes a
direction given to it under section 49M or 49N.
Maximum penalty: 60 penalty units.
(2) An offence against this section is an offence of strict
liability.
Note 1: For strict liability, see
section 6.1 of the Criminal Code.
Note 2: Chapter 2 of the Criminal Code sets out
the general principles of criminal responsibility.
Note 3: If a body corporate is convicted of an offence
against this section, subsection 4B(3) of the Crimes Act 1914 allows a
court to impose a fine of up to 5 times the penalty above.
(1) The accounting records that a general insurer keeps for the purposes
of this Act (including the prudential standards) must be kept:
(a) in Australia; and
(b) in writing in the English language or in a form in which they are
readily accessible and readily convertible into writing in the English
language.
(2) A general insurer commits an offence if the insurer contravenes this
section.
Maximum penalty: 200 penalty units.
Note 1: Chapter 2 of the Criminal Code sets out
the general principles of criminal responsibility.
Note 2: If a body corporate is convicted of an offence
against this section, subsection 4B(3) of the Crimes Act 1914 allows a
court to impose a fine of up to 5 times the penalty above.
24 Part IVA
Repeal the Part.
25 Subsection 50(1) (definition of
affairs)
After “body corporate” (first occurring), insert “that is
a general insurer, authorised NOHC or the subsidiary of a general insurer or
authorised NOHC”.
26 Subsection 50(1) (definition of prescribed
person)
After “body corporate” (first occurring), insert “that is
a general insurer, authorised NOHC or the subsidiary of a general insurer or
authorised NOHC, or a body corporate associated with another body
corporate”.
27 Subsection 50(1) (paragraph (b) of the
definition of prescribed person)
Omit “banker,”.
28 Paragraph 50(2)(a)
Omit “carries on insurance business”, substitute “is a
general insurer or authorised NOHC”.
29 Subsection 50(3)
Repeal the subsection.
30 Subsection 51(1)
Omit “authorised under this Act to carry on insurance business is or
is likely to become unable to meet its liabilities, APRA may”, substitute
“that is a general insurer or authorised NOHC”.
31 Before paragraph
51(1)(a)
Insert:
(aa) is, or is likely to become, unable to meet its liabilities;
or
(ab) has contravened or failed to comply with a provision of this Act or a
condition or direction applicable to it under this Act;
APRA may:
32 Subsection 51(2)
Omit “connected with”, substitute “a subsidiary
of”.
33 Paragraph 51(2)(c)
Omit “connected body corporate” (twice occurring), substitute
“subsidiary”.
34 Paragraph 51(2)(d)
Omit “connected body corporate”, substitute
“subsidiary”.
35 Subsections 51(3) and
(4)
Repeal the subsections.
36 Subsection 52(1)
Omit “authorised under this Act to carry on insurance
business”, substitute “that is a general insurer or authorised
NOHC”.
Note: The heading to section 52 is altered by omitting
“body corporate” and substituting “general insurer,
authorised NOHC or subsidiary”.
37 Subsection 52(1A)
Omit “connected with”, substitute “a subsidiary
of”.
38 Subsection 52(1B)
Omit “connected with a body corporate authorised under this Act to
carry on insurance business”, substitute “a subsidiary of a body
corporate that is a general insurer or authorised NOHC”.
39 Subsection 52(1B)
Omit “first-mentioned body corporate”, substitute
“subsidiary”.
40 Subsection 54(1)
Omit “with which the body corporate is connected”, substitute
“that is a subsidiary of the body corporate”.
41 Paragraph 54(1)(a)
Omit “other body corporate”, substitute
“subsidiary”.
42 Paragraph 60(2)(b)
Omit “authorised under this Act to carry on insurance
business”, substitute “a general insurer or authorised
NOHC”.
43 Subparagraph 60(2)(c)(i)
Repeal the subparagraph, substitute:
(i) if the body corporate is a general insurer or authorised
NOHC—whether it should continue to be a general insurer or authorised
NOHC; and
44 Subsection 62(1)
Omit “authorised under this Act to carry on insurance
business”, substitute “a general insurer or authorised
NOHC”.
45 Paragraph 62(1)(g)
Omit “in respect of unearned premiums or claims or in respect of both
unearned premiums and claims”, substitute “in its accounts for
liabilities in respect of insurance business carried on in
Australia”.
46 Paragraph 62(1A)(a)
Omit “(the connected body) that is connected with a
body corporate (the authorised body) for the purposes of
Part IVA”, substitute “that is a subsidiary of a body corporate
that is a general insurer or authorised NOHC”.
47 Subparagraph
62(1A)(b)(i)
Omit “authorised body”, substitute “insurer or
NOHC”.
48 Subparagraph
62(1A)(b)(ii)
Omit “connected body”, substitute
“subsidiary”.
49 After subparagraph
62(1A)(b)(ii)
Omit “served on the connected body”, substitute “served
on the subsidiary”.
50 Paragraphs 62(1A)(c) to
(f)
Omit “the body” (wherever occurring), substitute “the
subsidiary”.
51 Subsection 62(6)
Omit “body corporate”, substitute “general insurer,
authorised NOHC or the subsidiary of a general insurer or authorised
NOHC”.
52 Subsection 63(1) (definition of person
affected by a reviewable decision of the Treasurer or
APRA)
Repeal the definition, substitute:
person affected by a reviewable decision of the Treasurer or
APRA, in relation to a reviewable decision of the Treasurer or APRA,
means:
(a) in the case of a determination under subsection
93(3)—Lloyd’s or any Lloyd’s underwriter; or
(b) in any other case—the person in relation to whom the decision
was made.
53 Section 94
Omit “section 21”, substitute “section 9 or
10”.
54 Section 99
Repeal the section, substitute:
(1) It is the intention of the Parliament that section 10 (which
provides that a body corporate or Lloyd’s underwriter commits an offence
in certain circumstances) is not to apply to the exclusion of a law of a State
or Territory.
(2) However, section 10 applies to the exclusion of a law of a State
or Territory to the extent that the effect of the law is to authorise:
(a) a body corporate or a Lloyd’s underwriter to carry on insurance
business generally; or
(b) a body corporate that is not a general insurer to carry on specified
insurance business or to carry on insurance business included in a specified
class of insurance business.
55 Section 102
Omit “Part IV”, substitute “this
Act”.
Note: The heading to section 102 is replaced by the
heading “Laws about accounts or accounting
records”.
56 Section 114
Repeal the section.
57 Subsections 115(1) and
(2)
Repeal the subsections, substitute:
(1) For the purpose of ascertaining whether a body corporate that is a
general insurer, authorised NOHC or the subsidiary of a general insurer or
authorised NOHC has complied or is complying with the provisions of this Act,
APRA or a person authorised (in writing) by APRA for the purposes of this
section may:
(a) require an officer of the body corporate to produce to APRA or the
person any books required by or under this Act to be kept by the body corporate;
and
(b) inspect, take extracts from and make copies of any of the
books.
(2) For the purpose of considering an application made (whether before or
after the commencement of this subsection) by a body corporate for an
authorisation to carry on insurance business or NOHC authorisation, APRA or a
person authorised (in writing) by APRA for the purposes of this section
may:
(a) require an officer of the body corporate to produce to APRA any books
of the body corporate; and
(b) inspect, take extracts from and make copies of any of the
books.
58 Subsection 115A(1)
Omit “authorised under this Act to carry on insurance business, or a
body corporate with which a body corporate so authorised is connected for the
purposes of Part IVA,”, substitute “that is a general insurer,
authorised NOHC or the subsidiary of a general insurer or authorised
NOHC”.
59 Paragraph 115A(2)(a)
Omit “authorised under this Act to carry on insurance business, or a
body corporate with which a body corporate so authorised is connected for the
purposes of Part IVA,”, substitute “that is a general insurer,
authorised NOHC or the subsidiary of a general insurer or authorised
NOHC”.
60 Section 116
Repeal the section, substitute:
(1) If a general insurer is started to be wound up:
(a) the insurer must not carry on insurance business after the start of
the winding up; and
(b) APRA must ensure that a notice is published in the Gazette
stating that the insurer is no longer allowed to carry on insurance business
because of the start of the winding up.
(2) A general insurer doesn’t contravene subsection (1) merely
because it is carrying on business for the purpose of discharging liabilities
assumed by it before the start of the winding up.
(3) In the winding up of a general insurer, the insurer’s assets in
Australia must not be applied in the discharge of its liabilities other than its
liabilities in Australia unless it has no liabilities in Australia.
Note: Section 116A deals with assets and liabilities in
Australia.
(4) Nothing in this section affects the validity of a contract entered
into by a general insurer after it is started to be wound up.
(5) This section has effect and must be complied with despite anything in
any law of a State or Territory.
(1) For the purposes of section 116 (General insurer not to carry on
insurance business after start of winding up) and section 28 (General
insurer must hold sufficient assets), an amount is taken to be an asset in
Australia of a general insurer if:
(a) the insurer expects to recover the amount under a contract of
reinsurance entered into with a person who is outside Australia; and
(b) the amount relates to claims in respect of liabilities in Australia of
the insurer, whether or not the claims have been paid by the insurer;
and
(c) under the terms of the contract, payments by way of reinsurance are to
be made in Australia.
(2) For those purposes, a liability is taken to be a liability in
Australia of a general insurer if it is undertaken by the insurer under a
contract of insurance (including reinsurance) made in Australia or in respect of
which a proposal was accepted or a policy issued in Australia, other than a
contract:
(a) that relates only to a liability contingent on an event that can
happen only outside Australia, not being a liability that the body corporate has
undertaken to satisfy in Australia; or
(b) if the insurer carries on insurance business both in and outside
Australia—that relates only to a liability that the insurer has undertaken
to satisfy outside Australia.
(3) For those purposes, a liability is also taken to be a liability in
Australia of a general insurer if it is undertaken by the insurer under a
contract of insurance (including reinsurance) made outside Australia or in
respect of which a proposal was accepted or a policy issued outside Australia,
if the contract:
(a) relates to a liability contingent on an event that can happen only in
Australia; or
(b) if the insurer carries on insurance business both in and outside
Australia—relates to a liability that the insurer has undertaken to
satisfy in Australia;
and any part of the negotiations or arrangements leading to the making of
the contract, the acceptance of the proposal or the issue of the policy took
place or were made in Australia.
61 Section 117
Repeal the section, substitute:
(1) A body corporate that is not incorporated in Australia and:
(a) is a foreign general insurer; or
(b) is a subsidiary of a foreign general insurer;
must, at all times, have an address for service in Australia for the
purposes of this Act.
(2) An address becomes the address for service for the insurer or
subsidiary when written notice of the address is given to APRA. (The address
continues to be the address for service until APRA is given written notice of
another address.)
62 Section 117A
Repeal the section.
63 Subsection 118(1)
Repeal the subsection, substitute:
(1) A body corporate that is not incorporated in Australia and:
(a) is a foreign general insurer; or
(b) is a subsidiary of a foreign general insurer;
must, at all times while it is such an insurer or subsidiary, be
represented for the purposes of this Act by an individual resident in Australia
and appointed by it as its agent for the purposes of this Act.
64 Section 119
Repeal the section.
65 Section 120
Omit “subsection 21(3)”, substitute “subsection
10(2)”.
66 Paragraph 123(1)(aa)
Omit “section 48”, substitute
“section 49L”.
67 Subsections 128(1) and
(3)
Repeal the subsections.
Note: The heading to section 128 is replaced by the
heading “Signing of documents”.
68 After section 128
Insert:
(1) This section applies to an offence under section 7A, 9, 10, 14,
20, 28, 37 or 49P.
(2) If APRA considers that a person has done an act or failed to do an act
in circumstances that give rise to the commission of an offence to which this
section applies, APRA may give the person a written notice that APRA considers
the person may have committed the offence.
(3) A person:
(a) who does an act or fails to do an act in circumstances that give rise
to the commission of an offence to which this section applies; and
(b) receives a notice under subsection (2) in respect of the
offence;
also commits the offence in respect of each day, after the person receives
the notice, on which the circumstances that gave rise to the commission of the
offence continue (including the day of conviction for the offence or any later
day).
Note 1: This section does not affect the application of
section 4K of the Crimes Act 1914 to offences against this Act or
the regulations.
Note 2: Chapter 2 of the Criminal Code sets out
the general principles of criminal responsibility.
Note 3: If a body corporate is convicted of an offence
against this section, subsection 4B(3) of the Crimes Act 1914 allows a
court to impose a fine of up to 5 times the penalty above.
69 Subsection 129A
Omit “subsection 21(1), (2) or (3), 31(3F), 62(9), 106(2) or
109(3)”, substitute “section 9, 10 or 49M or subsection
62(9)”.
70 Subsections 129C(1) and
(1A)
Omit “body corporate authorised to carry on insurance business under
this Act”, substitute “general insurer”.
Note: The heading to section 129C is altered by
omitting “Bodies corporate” and substituting
“General insurers”.
71 Subsection 129D(1)
Omit “body corporate authorised to carry on insurance business under
this Act”, substitute “general insurer”.
72 Subsection 129D(1)
Omit “of Australia”.
73 Paragraphs 129D(1)(a) and
(b)
Omit “body corporate” (twice occurring), substitute
“insurer”.
74 Subsection 129D(2)
Omit “body corporate authorised to carry on insurance business under
this Act”, substitute “general insurer”.
75 Subsection 129D(2)
Omit “the body corporate” (twice occurring), substitute
“the insurer”.
76 Subsection 129D(2)
Omit “of Australia”.
77 Subsection 129D(7)
Omit “body corporate” (first occurring), substitute
“general insurer”.
78 Paragraphs 129D(7)(a) and
(b)
Omit “the body corporate” (twice occurring), substitute
“the insurer”.
79 Subsection 129D(8)
Omit “body corporate” (first occurring), substitute
“general insurer”.
80 Subsection 129D(8)
Omit “the body corporate”, substitute “the
insurer”.
1 Definitions
In this Schedule:
commencement means the commencement of the amendments of the
Insurance Act 1973 made by Schedule 1.
new Act means the Insurance Act 1973 as in force
immediately after the commencement.
old Act means the Insurance Act 1973 as in force
immediately before the commencement.
transition period means the period starting on the
commencement and ending 2 years after the commencement.
2 Early applications for authorisation to carry
on insurance business
(1) For the purpose of allowing applications for an authorisation to carry
on insurance business to be made and dealt with before the
commencement:
(a) Division 2 of Part III of the new Act; and
(b) any other provisions of the new Act so far as they relate to making or
dealing with such applications;
apply after this Act receives the Royal Assent as if those provisions had
come into operation at that time.
(2) An authorisation given before the commencement takes effect on the day
specified (in writing) by APRA. That day must not be before the
commencement.
3 Early approvals of auditors and
actuaries
(1) For the purpose of allowing a general insurer to appoint an auditor or
actuary, and APRA to approve such an appointment, under the new Act before the
commencement:
(a) Division 1 of Part IV of the new Act; and
(b) any other provisions of the new Act so far as they relate to such
appointments;
apply after this Act receives the Royal Assent as if those provisions had
come into operation at that time.
(2) An appointment made or approval given before the commencement takes
effect on the day specified (in writing) by APRA. That day must not be before
the commencement.
4 Application of the old Act during the
transition period
(1) APRA may determine that all or specified provisions of the old Act
continue to apply to a person or class of persons for a specified period during
the transition period.
(2) The determination may include a different specified period in respect
of:
(a) different provisions of the old Act; or
(b) different persons or classes of persons.
(3) The determination may be made subject to specified
conditions.
(4) A copy of the determination must be published in the Gazette
and, on Gazette publication, has effect according to its terms.
5 Application of the new Act during the
transition period
(1) APRA may determine that all or specified provisions of the new Act do
not apply to a person or class of persons for a specified period during the
transition period.
(2) The determination may include a different specified period in respect
of:
(a) different provisions of the old Act; or
(b) different persons or classes of persons.
(3) The determination may be made subject to specified
conditions.
(4) A copy of the determination must be published in the Gazette
and, on Gazette publication, has effect according to its terms.
6 Body corporate covered by both the old Act and
the new Act
(1) This item applies if during the transition period:
(a) a body corporate:
(i) is authorised under the old Act to carry on insurance business;
or
(ii) is a general insurer under the new Act; and
(b) the effect of determinations under items 4 and 5 is that
provisions of both the old Act and the new Act apply to the body
corporate.
(2) While the determinations have that effect:
(a) if the body corporate is not authorised under the old Act to carry on
insurance business—it is taken to be so authorised for the purposes of the
provisions of the old Act that apply to the body corporate; and
(b) if the body corporate is not a general insurer under the new
Act—it is taken to be a general insurer for the purposes of the provisions
of the new Act that apply to the body corporate.
7 Direction to assign
liabilities
(1) This item applies to a body corporate if:
(a) during the transition period, the body corporate is authorised under
the old Act to carry on insurance business because of a determination under
item 4; and
(b) APRA considers it appropriate to vary or revoke the determination so
that the body corporate will no longer be so authorised; and
(c) the body corporate is not a general insurer under the new Act;
and
(d) the body corporate has liabilities in respect of insurance business
carried on by it in Australia.
(2) This item also applies to a body corporate if:
(a) during the transition period, the body corporate is authorised under
the old Act to carry on insurance business because of a determination under
item 4; and
(b) as at 3 months before the end of the transition period, the body
corporate is not a general insurer under the new Act; and
(c) the body corporate has liabilities in respect of insurance business
carried on by it in Australia.
(3) Section 17 of the new Act (which allows APRA to direct the
assignment of liabilities) is taken to apply to the body corporate as
though:
(a) the body corporate’s authorisation under the old Act to carry on
insurance business were an authorisation under the new Act to carry on insurance
business; and
(b) APRA considered that it would revoke the authorisation if the body
corporate had no liabilities in respect of insurance business carried on by it
in Australia.
8 Auditors may be taken to be appointed under
the new Act
(1) APRA may determine (in writing) that a person who was, immediately
before the commencement, acting in accordance with the old Act as a body
corporate’s auditor, is:
(a) on and after the commencement; or
(b) on and after a specified day during the transition period;
taken to have been appointed as the body corporate’s auditor in
accordance with section 39 of the new Act.
(2) APRA may only make the determination with the person’s written
agreement.
(3) APRA must give a copy of the determination to the person and the body
corporate to which the person is taken to have been appointed.
9 Actuarial investigation under the old
Act
If APRA has given a body corporate notice under subsection 48A(2) of the
old Act, and a report under section 48A has not been given to APRA before
the commencement, sections 48A and 48B of the old Act continue to apply to
the body corporate on and after the commencement until the report is given to
APRA.
10 Directions to deal with the
transition
(1) For the purpose of dealing with the transition from the old Act to the
new Act, APRA may give written directions during the transition period
to:
(a) a person to whom some or all of the old Act continues to apply during
the transition period because of a determination under item 4; or
(b) a person to whom some or all of the new Act does not apply during the
transition period because of a determination under item 5; or
(c) a person to whom some or all of the new Act applies.
(2) A person to whom a direction is given under subitem (1) must
comply with the direction within the time specified in the direction.
11 Regulations
The Governor-General may make regulations providing for matters of a
transitional nature arising from the amendments made by Schedule 1 to this
Act.
Australian Prudential
Regulation Authority Act 1998
1 Paragraph 3(2)(c)
Repeal the paragraph, substitute:
(c) a general insurer, authorised NOHC or subsidiary of a general insurer
or authorised NOHC, within the meaning of the Insurance Act
1973;
Australian Securities and
Investments Commission Act 2001
2 Subsections 216(3) and
(6)
After “ASIC” (wherever occurring), insert “or
APRA”.
3 Paragraphs 218(3)(a) and
(c)
After “ASIC” (wherever occurring), insert “or
APRA”.
4 Paragraph 223(1)(d)
After “ASIC”, insert “or APRA”.
5 Subsections 223(2) and
(3)
After “ASIC” (wherever occurring), insert “or
APRA”.
6 Subsection 223(4)
After “ASIC’s costs” (wherever occurring), insert
“or APRA’s costs”.
7 Subsection 223(5)
After “ASIC” (wherever occurring), insert “or
APRA”.
8 Paragraph 462(3)(b)
Repeal the paragraph, substitute:
(b) the company’s liabilities, worked out for the purpose of the
prudential standards (within the meaning of that Act), exceed the
company’s assets worked out for that purpose.
9 Subsections 1292(1), (7), (9) and
(10)
After “ASIC” (wherever occurring), insert “or
APRA”.
10 Subsection 1294(2)
After “ASIC”, insert “and APRA”.
Financial Sector
(Collection of Data) Act 2001
11 Paragraph 5(4)(b)
Repeal the paragraph.
Financial Transactions
Reports Act 1988
12 Subsection 3(1) (definition of
insurer)
Omit all the words after “business”.
Insurance Acquisitions and
Takeovers Act 1991
13 Section 4 (paragraph (a) of the
definition of book outstanding claims provision)
Omit “outstanding claims provision”, substitute
“outstanding claims liability (within the meaning of the prudential
standards determined under that Act)”.
14 Section 4 (paragraph (a) of the
definition of book unearned premiums provision)
Omit “unearned premiums provision”, substitute “premiums
liability (within the meaning of the prudential standards determined under that
Act)”.
Seafarers Rehabilitation
and Compensation Act 1992
15 Section 3 (definition of authorised
insurer)
Omit “insurance company”, substitute “insurer or
Lloyd’s underwriter”.