Commonwealth Numbered Regulations

1989 No. 277 INSURANCE (AGENTS AND BROKERS) REGULATIONS (AMENDMENT) - REG 10

10. After regulation 10 of the Principal Regulations the following regulations
are inserted: Prescribed liabilities-subparagraphs 31B (1) (a) (ii) and 31B
(1) (b) (ii) of the Act

"10A. For the purposes of subparagraphs 31B (1) (a) (ii) and 31B (1) (b) (ii)
of the Act, the following liabilities are prescribed, namely, liabilities
incurred as a result of a breach of professional duty. Extent of indemnity
under contract of insurance-subparagraph 31B (1) (a) (ii) of the Act

"10B. (1) For the purposes of subparagraph 31B (1) (a) (ii) of the Act, the
succeeding provisions of this regulation apply as regards the extent to which
a person is to be indemnified under a contract of insurance in respect of the
prescribed liabilities arising out of or in the course of the person's
business as an insurance intermediary.

"(2) Subject to subregulation (3), the maximum amount payable as indemnity to
a person under a contract of insurance referred to in subregulation (1):

   (a)  where the person did not carry on business as an insurance
        intermediary in the financial year (in this regulation referred to as
        the 'previous financial year') last preceding the financial year in
        which the contract is entered into-must be not less than $500,000; or

   (b)  where:

        (i)    paragraph (a) does not apply; and

        (ii)   15% of the total amount of the premiums entered in the acco
               unting records of the person in respect of his or her business
               as an insurance intermediary in the previous financial year
               does not exceed $5,000,000; must be not less than:

        (iii)  $500,000;

        (iv)   the amount equal to 15% of the total amount referred to in
               subparagraph (ii); whichever is the greater; or

   (c)  where:

        (i)    paragraph (a) does not apply; and

        (ii)   15% of the total amount of the premiums entered in the
               accounting records of the person in respect of his or her
               business as an insurance intermediary in the previous financial
               year exceeds $5,000,000; must be not less than $5,000,000.

"(3) Where a contract of insurance referred to in subregulation (1) makes
provision for an excess or deductible:

   (a)  the amount of the excess or deductible must not, except with the
        approval of the Commissioner, exceed:

        (i)    if paragraph (2) (a) applies in relation to that
               person-$10,000; or

        (ii)   if paragraph (2) (b) or (c) applies in relation to that person:

                (A)  $10,000; or

                (B)  an amount equal to 2.5% of the insurance brokerage income
                     of that person in respect of the previous financial year;
                     whichever is the greater; and

   (b)  in calculating, for the purposes of subregulation (2), the maximum
        amount payable as indemnity to a person under a contract of insurance,
        the amount of the excess or deductible must be subtracted from the
        amount that would otherwise be the maximum amount payable as indemnity
        under the contract.

"(4) In subregulation (3), 'insurance brokerage income', in relation to a
person, means:

   (a)  moneys received as brokerage fees or as commission by the person in
        relation to the person's business as an insurance intermediary; and

   (b)  interest, dividends or other income received by the person from:

        (i)    any account maintained under subsection 26 (1) of the Act;or

        (ii)   any investment made under subsection 26 (4) of the Act. Extent
               of indemnity under contract of insurance-subparagraph 31B (1)
               (b) (ii) of the Act

"10C. (1) For the purposes of subparagraph 31B (1) (b) (ii) of the Act, the
succeeding provisions of this regulation apply as regards the extent to which
a person is to be indemnified under a contract of insurance in respect of the
prescribed liabilities arising out of or in the course of the person's
business as an insurance intermediary.

"(2) Subject to subregulation (3), the maximum amount payable as indemnity to
a person under a contract of insurance referred to in subregulation (1):

   (a)  where the person did not carry on business as an insurance
        intermediary in the financial year (in this regulation referred to as
        the 'previous financial year') last preceding the financial year in
        which the contract is entered into-must be not less than $500,000; or

   (b)  where:

        (i)    paragraph (a) does not apply; and

        (ii)   15% of the total amount of the premiums accepted by the person
               in respect of his or her business as an insurance intermediary
               in the previous financial year does not exceed $5,000,000; must
               be not less than:

        (iii)  $500,000; or

        (iv)   the amount equal to 15% of the total amount referred to in
               subparagraph (ii); whichever is the greater; or

   (c)  where:

        (i)    paragraph (a) does not apply; and

        (ii)   15% of the total amount of the premiums accepted by the person
               in respect of his or her business as an insurance intermediary
               in the previous financial year exceeds $5,000,000; must not be
               less than $5,000,000.

"(3) Where a contract of insurance referred to in subregulation (1) makes
provision for an excess or deductible:

   (a)  the amount of the excess or deductible must not, except with the
        approval of the Commissioner, exceed:

        (i)    if paragraph (2) (a) applies in relation to that
               person-$10,000; or

        (ii)   if paragraph (2) (b) or (c) applies in relation to that person:

                (A)  $10,000; or

                (B)  an amount equal to 2.5% of the insurance income of that
                     person in respect of the previous financial year;
                     whichever is the greater; and

   (b)  in calculating, for the purposes of subregulation (2), the maximum
        amount payable as indemnity to a person under a contract of insurance,
        the amount of the excess or deductible must be subtracted from the
        amount that would otherwise be the maximum amount payable as indemnity
        under the contract.

"(4) In subregulation (3), 'insurance income', in relation to a person, means
moneys received as fees or commission by the person in relation to the
person's business as an insurance intermediary. Prescribed form-subsection 31C
(2) of the Act

"10D. For the purposes of subsection 31C (2) of the Act, Form 3 is prescribed.
Application to be accompanied by certified copy of contract of
insurance-section 31C of the Act

"10E. (1) An application under subsection 31C (1) must be accompanied by a
copy of the contract of insurance required under subparagraph 31B (1) (b) (ii)
of the Act certified by the insurer to be a true copy or, if no such copy is
available, a statement from the insurer or an approved auditor certifying the
existence of the contract and giving details of the contract.

"(2) In subregulation (1), if the contract was arranged by an insurance
intermediary acting under a binder, a reference to an insurer includes a
reference to the insurance intermediary. Prescribed fee-paragraph 31D (1) (b)
of the Act

"10F. For the purposes of paragraph 31D (1) (b) of the Act, the following fee
is prescribed:

   (a)  where the applicant will, on becoming registered, carry on alone
        business as a foreign insurance agent (whether or not the applicant
        will also carry on such business in partnership):

        (i)    in the case of an individual-$350; or

        (ii)   in the case of a corporation-$700; or

   (b)  where the applicant will, on becoming registered, carry on business as
        a foreign insurance agent in partnership only-an amount calculated in
        accordance with the formula:
$700
----
A
where A is the number of partners. Commissioner to be informed of certain
changes-registered foreign insurance agents

"10G. (1) A registered foreign insurance agent must, in respect of business as
a foreign insurance agent carried on by him or her, inform the Commissioner of
any change in:

   (a)  the full name of the registered foreign insurance agent; and

   (b)  the name under which business as a foreign insurance agent is carried
        on; and

   (c)  the postal address of the registered foreign insurance agent; and

   (d)  the address of the principal place of business of the registered
        foreign insurance agent; and

   (e)  the principal place in Australia where the books, accounts and records
        of the registered foreign insurance agent are kept.

"(2) A registered foreign insurance agent who fails to inform the Commissioner
of a change referred to in subregulation (1) within a period of 21 days
commencing on the day the change occurred is guilty of an offence punishable
upon conviction by a fine not exceeding $500. Applications under section 31F
of the Act

"10H. An application under section 31F of the Act must be made in writing.
Fees for inspection and copying of documents-section 31F of the Act

"10J. (1) For the purposes of section 31F of the Act, the prescribed fee for
inspecting a document referred to in paragraph 31F (a), (b), (c) or (d) of the
Act is $5.

"(2) For the purposes of section 31F of the Act, the prescribed fee for making
a copy of a document referred to in paragraph 31F (a), (b), (c) or (d) of the
Act is a fee calculated at the rate of 40 cents for each page of a copy of the
whole or part of the document. Prescribed form-paragraph 31J (2) (a) of the
Act

"10K. For the purposes of paragraph 31J (2) (a) of the Act, Form 2 is
prescribed. Approved auditor's report-paragraph 31J (2) (c) of the Act

"10L. For the purposes of paragraph 31J (2) (c) of the Act, a report of an
approved auditor is in accordance with these Regulations if the report is:

   (a)  in accordance with regulation 13; and

   (b)  in respect of an audit of the accounts of the person lodging the
        relevant return; and

   (c)  in respect of the accounting period to which that return relates.".