Financial Sector (Collection of Data) determination No. 62 of 2006
EXPLANATORY STATEMENT
Prepared by the Australian Prudential Regulation Authority
Issued by the authority of APRA
Paragraph 13(1)(a) of the Financial Sector (Collection of Data) Act 2001 (FSCOD Act) and subsection 33(3) of the Acts Interpretation Act 1901.
Under subsection 13(1) of the FSCOD Act, APRA has power, in writing, to determine reporting standards that are required to be complied with by financial sector entities. Subsection 33(3) of the Acts Interpretation Act 1901 gives APRA power to revoke reporting standards so made.
Financial Sector (Collection of Data) determination No. 62 of 2006 (the instrument) revokes Reporting Standard GRS 800.2 (2005) Claim Data: Public and Product Liability and Professional Indemnity Insurance made by Financial Sector (Collection of Data) determination No. 31 of 2005 dated 21 June 2005 (the old reporting standard) and replaces it with a new reporting standard to rectify an error in the old reporting standard.
The instrument will come into force on the date of registration of the instrument on the Federal Register of Legislative Instruments.
- Background
This Explanatory Statement explains the changes being made by APRA to the reporting standard for general insurers (within the meaning of the Insurance Act 1973) which require them to provide information in relation to public liability and professional indemnity insurance for the purposes of APRA's National Claims & Policies Database (NCPD).
2. Purpose of the instrument
The purpose of the instrument is to revoke the old reporting standard and replace it with a corresponding reporting standard which incorporates appropriate adjustments. APRA considered that it would be clearer and more effective to consolidate the necessary changes within a new instrument. For that reason, APRA decided to revoke and replace this reporting standard rather than to amend it.
3. Operation of the instrument
Under the reporting standard, general insurers that write public liability, product liability or professional indemnity insurance policies must provide APRA with data on claims made or not settled during a half-yearly reporting period.
As with the old reporting standard, the information collected includes the class of business covered by the claim, its current status, the dates of loss and report, the jurisdiction of the claim, the nature of the loss and details of the likely case estimate, amongst other information.
A new definition for 'reportable claim' has been inserted into the reporting standard to replace the previous inaccurate definition. Definitions of 'reportable policy' and 'reportable facility business' have also consequently been removed as they are now redundant.
4. Consultation
As the instrument only changes the old reporting standard to remove an inaccurate definition of 'reportable claim' and replace it with a new and accurate definition, industry has not been consulted. Under the old reporting standard, industry has provided data in accordance with the new definition of ‘reportable claim’ on the understanding that this definition reflected APRA’s intention in relation to the operation of the reporting requirements. Consequently, industry will not experience any change in the extent of their reporting obligations to APRA.
Overview
The Financial Sector (Collection of Data) Determination No. 62 of 2006 was introduced by the Australian Prudential Regulation Authority (APRA) to address a gap identified in the reporting requirements for general insurers under the Financial Sector (Collection of Data) Act 2001. This determination revokes the previous reporting standard, GRS 800.2 (2005) Claim Data: Public and Product Liability and Professional Indemnity Insurance, which was established in 2005, and replaces it with a corrected version to rectify an error in the original standard. The objective of this instrument is to ensure that general insurers provide accurate and relevant data to APRA, specifically concerning claims made or not settled during a half-yearly reporting period for public liability, product liability, and professional indemnity insurance. The new reporting standard clarifies and rectifies the definition of 'reportable claim', while removing outdated definitions of 'reportable policy' and 'reportable facility business' that are now redundant.
Scope and Application
The Financial Sector (Collection of Data) determination No. 62 of 2006 applies to general insurers as defined under the Insurance Act 1973, who are required to provide data to the Australian Prudential Regulation Authority (APRA) regarding claims made or not settled during a half-yearly reporting period. These insurers must supply information on public liability, product liability, and professional indemnity insurance policies. The instrument aims to correct an error in the previous reporting standard by revoking the outdated standard and introducing a new one that includes an accurate definition of a'reportable claim'. This new standard consolidates necessary changes for clarity and effectiveness, while the definitions of 'reportable policy' and'reportable facility business' have been removed as they are now redundant. The instrument's jurisdictional reach is federal, as it is issued under the Financial Sector (Collection of Data) Act 2001 and the Acts Interpretation Act 1901. It comes into effect upon registration on the Federal Register of Legislative Instruments and does not extend or restrict application through subordinate instruments.
Key Provisions
The Financial Sector (Collection of Data) determination No. 62 of 2006, issued under the Financial Sector (Collection of Data) Act 2001 (FSCOD Act), revokes the previous reporting standard GRS 800.2 (2005) and replaces it with a new one to correct an error in the old reporting standard. This new determination, which comes into force upon its registration on the Federal Register of Legislative Instruments, is designed to ensure that general insurers provide accurate data regarding public liability, product liability, and professional indemnity insurance claims to the Australian Prudential Regulation Authority (APRA) for the National Claims & Policies Database (NCPD).
Under the new reporting standard (section 2), general insurers must provide APRA with data on claims made or not settled during each half-yearly reporting period. The data required includes the class of business, the current status of the claim, the dates of loss and report, the jurisdiction, the nature of the loss, and details of the likely case estimate, among other specified information. The main change from the previous standard is the introduction of a new, accurate definition of 'reportable claim', replacing the inaccurate one in the old standard. Additionally, definitions for'reportable policy' and'reportable facility business' have been removed as they are no longer necessary.
The obligations imposed by this determination require general insurers to ensure that they comply with the new reporting standard when submitting data to APRA. They must now adhere to the new definition of 'reportable claim' and ensure that all other required information is accurate and complete. Failure to comply with these requirements may result in non-compliance with APRA's data collection standards, potentially leading to enforcement actions by APRA.
In terms of consequences for non-compliance, while specific offences, penalties, or civil/criminal consequences are not detailed in the provided explanatory statement, it is implicit that breaches of the reporting standards could result in regulatory action from APRA. Such actions might include formal warnings, fines, or more severe penalties depending on the nature and extent of the non-compliance. The penalties for non-compliance with APRA's data collection requirements are ultimately subject to the provisions of the FSCOD Act and other relevant legislation, which could encompass both civil and criminal sanctions as appropriate.