Overview

The General Insurance Supervisory Levy Imposition Determination 2010, enacted by the Australian government, addresses the need for funding mechanisms for regulatory activities within the general insurance sector. The determination, which came into effect on 1 July 2010, relates to the 2010–11 financial year and is issued under the authority of the General Insurance Supervisory Levy Imposition Act 1998. It replaced the General Insurance Supervisory Levy Imposition Determination 2009. The policy objective of this determination is to ensure that the Australian Prudential Regulation Authority, Australian Securities and Investments Commission, and Australian Taxation Office have the necessary funds to perform their regulatory functions, while also supporting the operational costs of the National Claims and Policy Database. The determination sets out specific percentages and limits for both the general and special components of the levy, which are calculated based on the assets held by the entity and the insurer’s eligible premium income, respectively.

Scope and Application

The General Insurance Supervisory Levy Imposition Determination 2010 applies to companies registered under the Insurance Act 1973 and relates to the 2010-11 financial year. It specifies the calculation of the general and special components of the levy imposed by the General Insurance Supervisory Levy Imposition Act 1998, which is designed to fund the operations of the Australian Prudential Regulation Authority, certain activities of the Australian Securities and Investments Commission and the Australian Taxation Office, and the costs of the National Claims and Policy Database. The general component of the levy is calculated at a restricted rate of 0.02023 per cent of the company's assets, subject to a minimum and maximum levy amount, while the unrestricted component is calculated at 0.007776 per cent of assets. The special component of the levy is calculated based on the insurer's eligible premium income for public/product liability and professional indemnity insurance, with specified minimum and maximum levy amounts for each category. This determination revokes the previous General Insurance Supervisory Levy Imposition Determination 2009 and any obligations or liabilities incurred in previous financial years remain valid. The determination is a legislative instrument under the Legislative Instruments Act 2003.

Key Provisions

The General Insurance Supervisory Levy Imposition Determination 2010 outlines the levy structure for the 2010-11 financial year for companies registered under the Insurance Act 1973. This levy is imposed by the General Insurance Supervisory Levy Imposition Act 1998 and consists of two components: a general component and a special component (subsection 8(1AA)). The general component funds the operations of the Australian Prudential Regulation Authority (APRA), as well as certain activities of the Australian Securities and Investments Commission and the Australian Taxation Office. The special component, on the other hand, is dedicated to funding the National Claims and Policy Database (NCPD). For the general component, the levy is calculated based on a percentage of the company's asset value, with a restricted levy percentage set at 0.02023 per cent, subject to a minimum of $4,700 and a maximum of $835,000. The unrestricted levy percentage is set at 0.007776 per cent of the company's asset value. For the special component, the levy amount varies based on the type of insurance provided by the company. For public/product liability insurers, the levy is calculated at 0.0221 per cent of the insurer’s eligible premium income (EPI), subject to a minimum of $5,000 and a maximum of $50,000. For professional liability insurers, the levy is calculated at 0.0170 per cent of the insurer’s EPI, subject to a minimum of $5,000 and a maximum of $32,000. If an insurer provides both types of insurance, the levy is calculated by adding the two amounts, subject to the respective minimums and maximums. For runoff insurers, the special levy amount is set at $2,500 for single-line insurers and $5,000 for those providing both types of runoff insurance. The determination imposes specific obligations on general insurance companies to calculate and pay the supervisory levy as determined by the provisions outlined in the Act. These obligations include accurately determining the company’s asset value and eligible premium income, calculating the applicable levy percentages, and ensuring that the levy amounts are paid within the stipulated timeframe. Failure to comply with these obligations could lead to enforcement actions by the relevant regulatory authorities. Companies must also keep detailed records of their calculations and payments to demonstrate compliance, should they be required to do so by the Minister or any other relevant authority. The determination does not explicitly outline specific offences, penalties, or consequences for non-compliance within the text provided. However, under the general provisions of the General Insurance Supervisory Levy Imposition Act 1998, failure to comply with the levy obligations could lead to enforcement actions, which may include fines or other penalties. While the exact penalties are not detailed in the Explanatory Statement, they would typically align with the penalties provided under the primary Act, which could include civil or criminal penalties depending on the severity and intent behind the non-compliance. The Minister has the authority to take action against non-compliant companies, which may result in financial penalties or other regulatory measures to ensure compliance with the supervisory levy requirements.