Overview

The General Insurance Supervisory Levy Imposition Determination 2009 is a legislative instrument that was enacted to impose a levy on companies registered under the Insurance Act 1973. The purpose of the Act, enacted by the Australian Parliament, is to provide funding for the Australian Prudential Regulation Authority (APRA) and the costs associated with the National Claims and Policy Database (NCPD). The policy objective of this legislation is to ensure the financial stability of the general insurance industry and to facilitate efficient claims processing. The determination outlines the methodology for calculating the general and special components of the levy for the 2009-10 financial year, including the restricted and unrestricted components of the general levy and the special levy for public/product liability and professional indemnity insurers. The determination was made in accordance with the Legislative Instruments Act 2003 and was preceded by consultations with the finance sector.

Scope and Application

The General Insurance Supervisory Levy Imposition Determination 2009 applies to companies registered under the Insurance Act 1973, specifically general insurance companies, and it commenced on 1 July 2009 for the 2009-10 financial year. This determination revokes the General Insurance Supervisory Levy Imposition Determination 2008 and specifies the levy amounts for the 2009-10 financial year, comprising a general component and a special component. The general component funds the operations of the Australian Prudential Regulation Authority, the Australian Securities and Investments Commission, and the Australian Taxation Office, with a restricted component calculated at 0.02185 per cent of the insurer's assets, subject to a minimum of $4,700 and a maximum of $810,000, and an unrestricted component at 0.006796 per cent of the insurer's assets. The special component, which funds the National Claims and Policy Database, is calculated differently for public/product liability, professional indemnity, and runoff insurers, with specific percentages applied to the eligible premium income and set minimum and maximum thresholds. This determination is a legislative instrument under the Legislative Instruments Act 2003.

Key Provisions

The General Insurance Supervisory Levy Imposition Determination 2009 (the Determination) sets out the levy imposed on general insurance companies registered under the Insurance Act 1973, for the 2009-10 financial year, under the General Insurance Supervisory Levy Imposition Act 1998 (the Act). Section 8(1AA) of the Act mandates that the levy comprises a general component and a special component. The general component (subsection 8(3)) is calculated at 0.02185 per cent of the entity’s assets, subject to a minimum of $4,700 and a maximum of $810,000. The unrestricted component is calculated at 0.006796 per cent of the entity’s assets. The special component (subsection 8(3)) is calculated at 0.1202 per cent of the insurer’s eligible premium income (EPI) for public/product liability insurers, subject to a minimum of $5,000 and a maximum of $50,000, and at 0.2647 per cent of the insurer’s EPI for professional liability insurers, subject to a minimum of $5,000 and a maximum of $32,000. For insurers writing both types of insurance, the special levy is the sum of the two amounts. Additionally, a special levy of $2,500 applies to runoff insurers, with $5,000 applying to insurers providing both types of runoff insurance. Under the Determination, general insurance companies are required to calculate and remit the general and special components of the levy based on their assets and EPI as outlined. These calculations must adhere to the specified minimums and maximums, ensuring compliance with the provisions set forth in section 8 of the Act. Companies must also ensure that their calculations are accurate and that they remit the correct amounts by the deadlines specified in the Act. The Act and the Determination impose specific obligations on the companies to calculate and pay the specified levies. Failure to do so can result in financial penalties, enforcement actions, and potentially legal proceedings. The Determination also includes provisions for the calculation of asset values and EPI, which are crucial for determining the applicable levy amounts. Companies must maintain records and documentation to substantiate their calculations and remittance of the levy. Any failure to comply with the requirements set out in the Determination can result in civil and criminal penalties. Under the Act, non-compliance can lead to fines, with the specific penalties varying depending on the nature and severity of the breach. For instance, failure to remit the levy can result in a fine of up to $21,000 for individuals and $105,000 for bodies corporate, as outlined in section 51 of the Act. Additionally, persistent or egregious non-compliance may result in further enforcement actions, including potential criminal charges, which could lead to more severe penalties, including imprisonment.