Insurance (Agents and Brokers) Regulations (Cth)

Insurance (Agents and Brokers) Regulations

Statutory Rules 1985 No. 367 as amended

made under the

Insurance (Agents and Brokers) Act 1984

This compilation was prepared on 28 November 2000

taking into account amendments up to SR 1998 No. 190

Prepared by the Office of Legislative Drafting,

Attorney-General’s Department, Canberra

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      1Citation [see Note 1]

 These Regulations may be cited as the Insurance (Agents and Brokers) Regulations.

2Definitions

• (1)

  In these Regulations, unless the contrary intention appears:

  Act means the Insurance (Agents and Brokers) Act 1984.

  ADI (authorised deposit-taking institution) means a body corporate that is an ADI for the purposes of the Banking Act 1959.

• (2)

  In these Regulations, a reference to a form by number is a reference to the form in the Schedule that bears that number.

2AApproved auditor

• (1)

  For the purposes of the definition of approved auditor in section 9 of the Act, the following class of persons is specified, namely, the class consisting of any person, being a registered company auditor, who, in relation to a registered insurance broker or a registered foreign insurance agent, is an independent auditor.

• (2)

  In subregulation (1), independent auditor means an auditor who, in relation to a registered insurance broker or a registered foreign insurance agent, does not have an interest, pecuniary or otherwise, in the business of insurance intermediary carried on by that registered insurance broker or registered foreign insurance agent, being an interest that could conflict with the proper performance of the auditor’s functions as an auditor of the accounts of that business.

2BExtent of indemnity under insurance contracts (Act, s 9B (1) (c))

• (1)

  For the purposes of paragraph 9B (1) (c) of the Act, the following provisions of this regulation apply in regard to 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)

    if 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) immediately before the financial year in which the contract is entered into — must be not less than $1,000,000; or

  • (b)

    if:

    • (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 does not exceed $5,000,000;

   must be not less than:

  • (iii)

    $1,000,000; or

  • (iv)

    the amount equal to 15% of the total amount referred to in subparagraph (ii);

   whichever is the greater; or

  • (c)

    if:

    • (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)

  If 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 ASIC, 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;

    • (ii)

      any investment made under subsection 26 (4) of the Act.

  Note   Regulation 2B applies only to contracts entered into or renewed after the commencement of section 12 of the Insurance Laws Amendment Act 1994.

3Prescribed liabilities – paragraph 19 (1) (b) of the Act

 For the purposes of paragraph 19 (1) (b) of the Act, the following liabilities are prescribed, namely, liabilities incurred as a result of a breach of professional duty.

4Domestic or personal insurance business

• (1)

  For paragraphs 19 (1) (c), 21 (1) (ba) and 21 (1A) (da) and subsection 25 (1AA) of the Act, the undertaking of liability under a contract of insurance that is a prescribed contract under section 34 of the Insurance Contracts Act 1984 is domestic or personal insurance business.

• (2)

  In subregulation (1), contract of insurance includes an interim contract of insurance within the meaning of subsection 11 (2) of the Insurance Contracts Act 1984.

5Application to be accompanied by certified copy of contract of insurance – section 20 of the Act

• (1)

  An application under subsection 20 (1) of the Act shall be accompanied by a copy of the contract of insurance required under paragraph 19 (1) (b) 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.

6Prescribed fee – paragraph 21 (1) (c) of the Act

 For the purposes of paragraph 21 (1) (c) of the Act, the following fee is prescribed:

• (a)

  where the applicant will, upon becoming registered, carry on alone business as an insurance broker (whether or not the applicant will also carry on such business in partnership):

  • (i)

    in the case of an individual — $400; or

  • (ii)

    in the case of a corporation — $800;

• (b)

  where the applicant will, upon becoming registered, carry on business as an insurance broker in partnership only — an amount calculated in accordance with the formula:

 where A is the number of partners.

6AARegistration renewal (Act, s 21 (1A) (f))

• (1)

  For paragraph 21 (1A) (f) of the Act, the fee is:

  • (a)

    for an individual — $400; or

  • (b)

    for a corporation — $800.

• (2)

  However, for an applicant who carries on business as an insurance broker in partnership only, the fee is:

.

6APrescribed investments by broker – subparagraph 21 (7) (c) (ii) of the Act

 For the purposes of subparagraph 21 (7) (c) (ii) of the Act, the investments referred to in subregulation 10 (2) are prescribed.

7Registered insurance brokers to inform ASIC of certain changes

• (1)

  A registered insurance broker shall, in respect of business as an insurance broker carried on by that broker, inform ASIC of any change in:

  • (a)

    the full name of the registered insurance broker;

  • (b)

    the name under which business as an insurance broker is carried on;

  • (c)

    the postal address of the registered insurance broker;

  • (d)

    the address of the principal place of business of the registered insurance broker; and

  • (f)

    the principal place in Australia where the books, accounts and records of the registered insurance broker are kept.

• (2)

  A registered insurance broker who fails to inform ASIC 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.

8Applications under section 23 of the Act

An application under section 23 of the Act shall be made in writing.

9Fees – inspection and copying of documents (Act, s 23)

• (1)

  For the purposes of section 23 of the Act, the prescribed fee for inspecting a document referred to in paragraph 23 (a), (b), (c), (d) or (e) of the Act is $10.

• (2)

  ASIC must:

  • (a)

    on the request of a person; and

  • (b)

    on payment of the fee calculated in accordance with subregulation (3);

   provide the person with a copy of the whole or part of a document referred to in paragraph 23 (a), (b), (c), (d) or (e) of the Act.

• (3)

  The fee payable under subregulation (2) is:

  • (a)

    an amount calculated at the rate of $1 for each page of a copy of the whole or part of the document; or

  • (b)

    if, at the request of the person, the copy of the document is made available in electronic form — an amount calculated at the rate of $1 for each page of the whole or part of the document that is provided in that form.

9BApproved auditor’s report – paragraph 25A (2) (c) of the Act

 For the purposes of paragraph 25A (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 12; 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.

10Prescribed manner of investing (Act, s 26 (4))

• (1)

  In this regulation:

  approved ADI means the Reserve Bank of Australia or an ADI.

  member means a person mentioned in paragraph (aa) of the definition of member in section 9 of the Corporations Law.

• (2)

  For subsection 26 (4) of the Act, a registered insurance broker may invest money:

  • (a)

    in a security issued or guaranteed by the Commonwealth or a State or Territory; or

  • (b)

    in a security issued by a Commonwealth, State or Territory authority; or

  • (c)

    by deposit with an approved ADI; or

  • (d)

    by deposit with, or shares in, a building society; or

  • (e)

    by deposit with a credit union; or

  • (f)

    in a bill of exchange (other than a cheque), or a promissory note or other negotiable instrument, issued, accepted, drawn or endorsed by an approved ADI; or

  • (g)

    in a cash management trust that was in existence on 1 July 1986; or

  • (h)

    in a cash management trust, except a cash management trust mentioned in paragraph (g), established and managed by a company the whole of the issued share capital in which is held by:

    • (i)

      an approved ADI; or

    • (ii)

      a company registered under the Life Insurance Act 1995 to carry on life insurance business; or

    • (iii)

      a member of Australian Stock Exchange Limited, The Ballarat Stock Exchange, The Bendigo Stock Exchange or The Stock Exchange of Newcastle Limited.

10APrescribed liabilities – subparagraphs 31B (1) (a) (ii) and 31B (1) (b) (ii) of the Act

 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.

10EApplication to be accompanied by certified copy of contract of insurance – section 31C of the Act

• (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.

10FPrescribed fee – paragraph 31D (1) (b)

 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 — $400; or

  • (ii)

    in the case of a corporation — $800; 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:

 where A is the number of partners.

10GRegistered foreign insurance agents to inform ASIC of certain changes

• (1)

  A registered foreign insurance agent must, in respect of business as a foreign insurance agent carried on by him or her, inform ASIC 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 ASIC 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.

10HApplications under section 31F of the Act

An application under section 31F of the Act must be made in writing.

10JFees – inspection and copying of documents (Act, s 31F)

• (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 $10.

• (2)

  ASIC must:

  • (a)

    on the request of a person; and

  • (b)

    on payment of the fee calculated in accordance with subregulation (3);

   provide the person with a copy of the whole or part of a document referred to in paragraph 31K (a), (b), (c) or (d) of the Act.

• (3)

  The fee payable under subregulation (2) is:

  • (a)

    an amount calculated at the rate of $1 for each page of a copy of the whole or part of the document; or

  • (b)

    if, at the request of the person, the copy of the document is made available in electronic form — an amount calculated at the rate of $1 for each page of the whole or part of the document that is provided in that form.

10LApproved auditor’s report – paragraph 31J (2) (c) of the Act

 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.

12Audit reports – registered insurance brokers

• (1)

  Where an audit of the accounts of a registered insurance broker’s business as an insurance intermediary is carried out, the registered insurance broker must obtain a report in accordance with subregulation (2) from an approved auditor.

• (2)

  A report referred to in subregulation (1) must:

  • (a)

    state whether the accounts to which the report relates are, in the opinion of the auditor, in accordance with the Act and give particulars of any matters that are not, in the opinion of the auditor, in accordance with the Act; and

  • (b)

    state whether the accounting records of the broker have been, in the opinion of the auditor, properly kept and whether they record and explain correctly the transactions and financial position of the broker and give particulars of:

    • (i)

      any accounting records that, in the opinion of the auditor, have not been so kept; and

    • (ii)

      any transactions that, in the opinion of the auditor, are not correctly recorded and explained; and

  • (c)

    state whether the auditor has obtained the information and explanations that the auditor requested from the broker for the purposes of the audit and give particulars of information and explanations that the auditor requested but did not obtain; and

  • (d)

    state whether, in the opinion of the auditor, the accounts referred to in paragraph (a) agree with the accounting records of the broker in respect of the period to which those accounts relate and truly represent the transactions and financial position of the broker in respect of that period and, if any of those accounts, in the opinion of the auditor, fail so to represent the transactions or financial position of the broker in respect of that period, give particulars of the failure.

• (3)

  A registered insurance broker must, if so requested by ASIC, give to ASIC a copy of the report obtained by the broker under subregulation (1).

13Audit reports – registered foreign insurance agents

• (1)

  Where an audit of the accounts of a registered foreign insurance agent’s business as an insurance intermediary is carried out, the registered foreign insurance agent must obtain a report in accordance with subregulation (2) from an approved auditor.

• (2)

  A report referred to in subregulation (1) must:

  • (a)

    state whether the accounts to which the report relates are, in the opinion of the auditor, in accordance with the Act and give particulars of any matters that are not, in the opinion of the auditor, in accordance with the Act; and

  • (b)

    state whether the accounting records of the foreign insurance agent have been, in the opinion of the auditor, properly kept and whether they record and explain correctly the transactions and financial position of the foreign insurance agent and give particulars of:

    • (i)

      any accounting records that, in the opinion of the auditor, have not been so kept; and

    • (ii)

      any transactions that, in the opinion of the auditor, are not correctly recorded and explained; and

  • (c)

    state whether the auditor has obtained the information and explanations that the auditor requested from the foreign insurance agent for the purposes of the audit and give particulars of information and explanations that the auditor requested but did not obtain; and

  • (d)

    state whether, in the opinion of the auditor, the accounts referred to in paragraph (a) agree with the accounting records of the foreign insurance agent in respect of the period to which those accounts relate and truly represent the transactions and financial position of the foreign insurance agent in respect of that period and, if any of those accounts, in the opinion of the auditor, fail so to represent the transactions or financial position of the foreign insurance agent in respect of that period, give particulars of the failure.

• (3)

  A registered foreign insurance agent must, if so requested by ASIC, give to ASIC a copy of the report obtained by the registered foreign insurance agent under subregulation (1).

14Inspection and audit of records

• (1)

  A registered insurance broker or an employee or agent of a registered insurance broker may be required by ASIC or an authorised person to produce any of the books, accounts and records kept by that broker in relation to that broker’s business as an insurance intermediary and ASIC or the authorised person may inspect, audit, take extracts from and make copies of, any such book, account or record.

• (1A)

  A registered foreign insurance agent or an employee or agent of a registered foreign insurance agent may be required by ASIC or an authorised person to produce any of the books, accounts and records kept by that foreign insurance agent in relation to that foreign insurance agent’s business as an insurance intermediary and ASIC or the authorised person may inspect, audit, take extracts from and make copies of, any such book, account or record.

• (2)

  A registered insurance broker or a registered foreign insurance agent who, without reasonable excuse, fails to comply with a requirement under subregulation (1) of ASIC or an authorised person, or whose employee or agent without reasonable excuse fails to comply with such a requirement, is guilty of an offence punishable upon conviction by a fine not exceeding $500.

• (3)

  In subregulations (1) and (1A), authorised person means a person authorised by ASIC in writing for the purposes of the relevant subregulation.

Notes to the Insurance (Agents and Brokers) Regulations

Note 1

The Insurance (Agents and Brokers) Regulations (in force under the Insurance (Agents and Brokers) Act 1984 ) as shown in this compilation comprise Statutory Rules 1985  No. 367  amended as indicated in the Tables below.

Table of Statutory Rules

Year and number Date of notification in Gazette Date of commencement Application, saving or

transitional provisions
1985 No. 367	20 Dec 1985	1 Jan 1986 (see Gazette 1985, No. S551)
1985 No. 368	20 Dec 1985	2 Jan 1986	—
1986 No. 351	3 Dec 1986	3 Dec 1986	—
1987 No. 339	11 Jan 1988	R. 3 (1): 3 Dec 1986 R. 3 (2): 1 Apr 1987 Remainder: 11 Jan 1988	—
1989 No. 277	19 Oct 1989	20 Oct 1989	—
1990 No. 447	21 Dec 1990	Rr. 3 and 5: 1 Jan 1991 Remainder: 21 Dec 1990	—
1994 No. 325	23 Sept 1994	1 Oct 1994 (see r. 1.1 and Gazette 1994, No. GN38)	R. 12
1995 No. 57	29 Mar 1995	29 Mar 1995	—
1996 No. 303	18 Dec 1996	18 Dec 1996	—
1997 No. 225	27 Aug 1997	27 Aug 1997	—
1997 No. 237	10 Sep 1997	10 Sep 1997	—
1998 No. 77	5 May 1998	5 May 1998	—
1998 No. 190	30 June 1998	1 July 1998	—

Table of Amendments

ad. = added or inserted  am. = amended rep. = repealed rs. = repealed and substituted
Provision affected	How affected
R. 2..........................................	am. 1989 No. 277; 1998 No. 190
R. 2A.......................................	ad. 1989 No. 277
am. 1998 No. 190
R. 2B.......................................	ad. 1994 No. 325
am. 1995 No. 57; 1998 No. 190
R. 3..........................................	rs. 1989 No. 277
R. 3A.......................................	ad. 1989 No. 277
rep. 1994 No. 325
R. 4..........................................	am. 1989 No. 277
rep. 1994 No. 325
ad. 1997 No. 225
R. 5..........................................	am. 1989 No. 277
R. 6..........................................	am. 1990 No. 447
R. 6A.......................................	ad. 1994 No. 325
R. 6AA.....................................	ad. 1998 No. 190
R. 7..........................................	am. 1989 No. 277; 1998 No. 190
R. 9..........................................	am. 1989 No. 277; 1990 No. 447; 1998 No. 190
R. 9A.......................................	ad. 1989 No. 277
rep. 1994 No. 325
R. 9B.......................................	ad. 1989 No. 277
R. 10........................................	rs. 1986 No. 351
am. 1987 No. 339; 1996 No. 303
rs. 1998 No. 190
R. 10A.....................................	ad. 1989 No. 277
Rr. 10B, 10C..........................	ad. 1989 No. 277
rep. 1994 No. 325
R. 10D.....................................	ad. 1989 No. 277
rep. 1998 No. 190
R. 10E.....................................	ad. 1989 No. 277
R. 10F.....................................	ad. 1989 No. 277
am. 1990 No. 447
R. 10G.....................................	ad. 1989 No. 277
am. 1998 No. 190
R. 10H.....................................	ad. 1989 No. 277
R. 10J......................................	ad. 1989 No. 277
am. 1990 No. 447; 1998 No. 190
R. 10K.....................................	ad. 1989 No. 277
rep. 1994 No. 325
R. 10L......................................	ad. 1989 No. 277
R. 11........................................	ad. 1985 No. 368
rs. 1989 No. 277
rep. 1998 No. 190
R. 12........................................	ad. 1985 No. 368
rs. 1989 No. 277
am. 1998 No. 190
R. 13........................................	ad. 1985 No. 368
rs. 1989 No. 277
am. 1998 No. 190
R. 14........................................	ad. 1985 No. 368
am. 1989 No. 277; 1998 No. 190
R. 15........................................	ad. 1997 No. 237
am. 1998 No. 77
rep. 1998 No. 190
Rr. 16, 17................................	ad. 1997 No. 237
rep. 1998 No. 190
Schedule 1.............................	rep. 1989 No. 277
Schedule 2.............................	ad. 1985 No. 368
rep. 1989 No. 277
Schedule.................................	ad. 1989 No. 277
am. 1994 No. 325
rep. 1998 No. 190
Forms 1, 2...........................	ad. 1989 No. 277
rep. 1994 No. 325
Forms 3, 4...........................	ad. 1989 No. 277
rep. 1998 No. 190