Financial Sector (Collection of Data) exemption No. 2 of 2007
EXPLANATORY STATEMENT
Prepared by the Australian Prudential Regulation Authority (APRA)
Financial Sector (Collection of Data) Act 2001 (the Act), subsection 16(1)
Under subsection 16(1) of the Act, APRA may, by legislative instrument, exempt a financial sector entity from the requirement to comply with all the requirements or specified requirements contained in applicable reporting standards.
Taxi Insurance Co-Operative Limited ABN 35 628 293 055 (Taxi) is a “financial sector entity” as defined by subsection 5(2) of the Act. Financial Sector (Collection of Data) exemption No. 2 of 2007 (the instrument) exempts Taxi from the requirements contained in the reporting standards relating to quarterly returns specified in the Schedule.
1. Background
Taxi is a local general insurer authorised to carry on insurance business in Australia under subsection 12(1) of the Insurance Act 1973. Taxi is listed as being in run-off and is restricted by APRA from writing new or renewal insurance business. A notice varying the conditions on Authorisation to carry on insurance business states that from 4pm on 30 June 2007, Taxi may only conduct insurance business in Australia for the sole purpose of discharging liabilities that arose under policies entered prior to that date.
Taxi’s licence conditions also restricted Taxi to only write motor vehicle insurance to its members who are owners of “Ordinary Taxis” operating in the Perth Metropolitan area.
The last annual return lodged by Taxi (as at 30 June 2007) reported outstanding claims reserves entirely as a short term liability and at a level that is considered to be immaterial to APRA in terms of supervision and data publication purposes.
2. Purpose of the instrument
The purpose of the instrument is to exempt Taxi from all of the requirements relating to quarterly reporting in the following reporting standards:
- GRS 110.0 (2007) Minimum Capital Requirement
- GRS 120.0 (2007) Determination of Capital Base
- GRS 130.0 (2007) Off Balance Sheet Business - Credit Substitutes Provided and Capital Charge
- GRS 130.1 (2007) Off Balance Sheet Business - Liquidity Support Facilities Obtained
- GRS 130.2 (2007) Off Balance Sheet Business - Charges Granted and Risk Charge
- GRS 130.3 (2007) Off Balance Sheet Business - Credit Support Received
- GRS 140.0 (2007) Investments - Direct Interest Rate Holdings and Risk Charge
- GRS 140.1 (2007) Investments - Direct Equity Holdings and Risk Charge
- GRS 140.2 (2007) Investments - Direct Property Holdings and Risk Charge
- GRS 140.3 (2007) Investments - Loans and Advances and Risk Charge
- GRS 140.4 (2007) Investments - Assets Indirectly Held by Insurer and Risk Charge
- GRS 150.0 (2007) Asset Concentration and Risk Charge
- GRS 160.0 (2007) Derivative Activity and Risk Charge
- GRS 170.0 (2007) Concentration Risk Charge
- GRS 170.1 (2007) Maximum Event Retention and Risk Charge for Lenders Mortgage Insurers
- GRS 210.0 (2007) Outstanding Claims Provision - Insurance Risk Charge
- GRS 210.1 (2007) Premium Liabilities - Insurance Risk Charge
- GRS 300.0 (2007) Statement of Financial Position
- GRS 310.0 (2007) Statement of Financial Performance
- GRS 310.1 (2007) Premium Revenue and Reinsurance Expense
- GRS 310.2 (2007) Claims Expense and Reinsurance Recoveries
- GRS 310.3 (2007) Investment and Operating Income and Expense
3. Consultation
APRA has been in consultation with TAXIS in relation to this issue.
Overview
The Financial Sector (Collection of Data) exemption No. 2 of 2007 was introduced under the Financial Sector (Collection of Data) Act 2001, enacted by the Australian Parliament, to address specific reporting requirements for financial sector entities. This exemption instrument, prepared by the Australian Prudential Regulation Authority (APRA), exempts Taxi Insurance Co-Operative Limited from the obligation to comply with certain quarterly reporting standards. The policy objective behind this exemption is to alleviate the reporting burden on entities like Taxi that are in run-off and are restricted from writing new insurance business, thereby focusing regulatory efforts on entities actively participating in the market. The instrument aims to tailor regulatory requirements to the operational context of entities that are not significantly impacting the broader financial sector.
Scope and Application
The Financial Sector (Collection of Data) exemption No. 2 of 2007 is a legislative instrument issued under subsection 16(1) of the Financial Sector (Collection of Data) Act 2001 by the Australian Prudential Regulation Authority (APRA). This exemption applies specifically to Taxi Insurance Co-Operative Limited, a financial sector entity defined by the Act, which is restricted by APRA from writing new or renewal insurance business and is currently in run-off. The exemption relieves Taxi from the obligation to comply with all the requirements relating to quarterly reporting under various specified reporting standards, recognising that the entity's outstanding claims reserves are immaterial for supervision and data publication purposes. This exemption is geographically and jurisdictionally limited to Australia, as Taxi is an authorised insurer under the Insurance Act 1973 and operates within the constraints set by APRA. The exemption does not extend to other entities or industries, nor does it alter the fundamental requirements of the Act for other financial sector entities. The exemption is clearly delineated in the Schedule of the instrument and does not introduce any new exclusions or thresholds beyond what is specified.
Key Provisions
The main sections of the Financial Sector (Collection of Data) exemption No. 2 of 2007 pertain to the exemption granted to Taxi Insurance Co-Operative Limited (Taxi) from specific reporting requirements under the Financial Sector (Collection of Data) Act 2001 (the Act). Under subsection 16(1) of the Act, the Australian Prudential Regulation Authority (APRA) can exempt a financial sector entity from certain reporting obligations. In this case, the instrument exempts Taxi from complying with the quarterly reporting standards listed in the Schedule, such as GRS 110.0 (2007) Minimum Capital Requirement and GRS 120.0 (2007) Determination of Capital Base, among others.
Taxi, being a financial sector entity as defined by subsection 5(2) of the Act, is restricted by APRA from writing new or renewal insurance business. The exemption applies to the quarterly reporting standards relevant to its financial status, including capital requirements, investments, derivative activities, and outstanding claims provisions. The intent behind this exemption is to ease the reporting burden on Taxi, which is in run-off and primarily focused on discharging existing liabilities.
The obligations imposed on Taxi by this exemption are significant in that it relieves the company from the need to prepare and submit quarterly reports on various financial metrics and positions. This includes detailed reports on capital adequacy, investment holdings, derivative activities, and claims provisions. By exempting Taxi from these requirements, APRA acknowledges that the current financial position of Taxi, particularly its immaterial short-term liability claims reserves, does not necessitate such detailed reporting for effective supervision and data publication.
Failure to comply with the exemptions and conditions set out in this instrument may result in various civil and criminal consequences. APRA has the authority to take action against non-compliance, which could include fines and other penalties as prescribed by law. The maximum penalties for non-compliance can be substantial, reflecting the importance of adhering to the conditions of the exemption. However, the specific penalties are not detailed in the explanatory statement, and would typically be found in the primary legislation or related regulations.