Commonwealth Numbered Regulations - Explanatory Statements

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LIFE INSURANCE REGULATIONS (AMENDMENT) 1997 NO. 100

EXPLANATORY STATEMENT

STATUTORY RULES 1997 No. 100

Issued by the Authority of the Assistant Treasurer

Life Insurance Act 1995

Life Insurance Regulations (Amendment)

Section 253 of the Life Insurance Act 1995 (the Act) provides that the Governor-General may make regulations for the purposes of the Act.

The Act provides for the prudent management of life companies and for their supervision by the Insurance and Superannuation Commissioner.

Five rounds of regulations have been released progressively since the commencement of the Act on 1 July 1995. This amendment comprises the sixth round of regulations.

Section 47 of the Act provides that regulations may declare what constitutes income of a statutory fund, and what constitutes outgoings of a statutory fund.

Regulation 4.01B commenced on 18 December 1996, and establishes the manner in which income and outgoings of a statutory fund are determined.

The determination of income and outgoings, as defined by regulation 4.01B, is the first critical step in the determination of the operating profit, and the resulting distribution of profit to policy owners and shareholders. These provisions are vital to achieving the object of the Act - that is, the effective protection of the interests of owners and prospective owners of life insurance policies.

Regulation 4.01B provides that 'income' and 'outgoings' should be determined in a manner consistent with the Commissioner's rules made pursuant to subsection 82(5) of the Act, in force as at the time when the Regulation takes effect. The

Commissioner's rules in force as at 18 December 1996 were Commissioner's Rules No 21. These rules provide the financial reporting requirements for life companies, and rely in part on methodologies detailed in Corporations Law, Actuarial Standards and Statements of Accounting Standards.

This amendment clarifies that the Commissioner's rules made pursuant to paragraphs 82(5)(a) and (b) referred to in the Regulation are to be the Commissioner's rules as in force from time to time, and are not limited to those Commissioner's rules as in force at the time when regulation 4.01B took effect. This is to allow the Commissioner to make new rules as necessary without requiring the repeated amendments to regulations.

The inclusion in the Regulations of an ambulatory reference to the rules does not conflict with the general prohibition in subsection 49A(1) of the Acts Interpretation Act 1901 ("the Act") of the making, in regulations, of "provision for or in relation to a matter by applying, adopting or incorporating any matter contained in an instrument or other writing as in force or existing from time to time". This is because subsection 49A(1) expressly authorises the application, adoption or incorporation, with or without modification, of.

"(a)       the provisions of any Act or of any regulations, as in force at a particular time or as in force from time to time;".

Subsection 49A(2) of the AIA interprets "regulations" to mean "regulations or rules under an Act", which appears to incorporate Commissioner's rules made under the Act.

In addition, this amendment corrects the erroneous reference in regulation 4.01B to 'subregulation', to refer to 'subsection'.

The commencement date of the Regulation is the date of gazettal.


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