Overview

The General Insurance Supervisory Levy Imposition Determination 2011 was enacted to establish the levies imposed on general insurance companies for the 2011-12 financial year under the General Insurance Supervisory Levy Imposition Act 1998. This Act was introduced to address the need for funding the supervision and regulation of the general insurance industry in Australia, thereby ensuring the stability and efficiency of the financial services sector. The determination was made by the Minister for Finance and deputised officials, in line with the provisions of the Acts Interpretation Act 1901, and serves to implement the policy objectives outlined by the Australian government to maintain and enhance the regulatory framework governing the insurance industry. The levy comprises a general component, which funds the operations of the Australian Prudential Regulation Authority, the Australian Securities and Investments Commission, and the Australian Taxation Office, and a special component, which funds the National Claims and Policy Database. The determination specifies the percentages and thresholds applicable for these components to ensure a balanced and sustainable funding model for regulatory activities.

Scope and Application

The General Insurance Supervisory Levy Imposition Determination 2011 applies to companies registered under the Insurance Act 1973, specifically those within the general insurance sector, and it pertains to the 2011-12 financial year. This legislation imposes a supervisory levy on general insurance companies to fund the operations of regulatory bodies such as the Australian Prudential Regulation Authority (APRA), the Australian Securities and Investments Commission, and the Australian Taxation Office. The levy is divided into a general component and a special component, with the former funding the general operations of these regulatory bodies and the latter specifically funding the National Claims and Policy Database (NCPD). The determination sets out specific percentages and thresholds for calculating both the restricted and unrestricted components of the general levy, as well as the special levy, based on an insurer's asset value or eligible premium income, respectively. This legislation revokes the previous General Insurance Supervisory Levy Imposition Determination 2010 from 1 July 2011, although any obligations or liabilities incurred under the previous determination remain valid.

Key Provisions

The General Insurance Supervisory Levy Imposition Determination 2011 outlines the specifics of the levy imposed on general insurance companies under the General Insurance Supervisory Levy Imposition Act 1998. This levy, applicable for the 2011-12 financial year, is divided into two components: a general component and a special component. According to section 8(1AA), the general component funds the operations of the Australian Prudential Regulation Authority (APRA) and certain activities of the Australian Securities and Investments Commission and the Australian Taxation Office. The special component, on the other hand, is intended to cover the costs of the National Claims and Policy Database (NCPD). Section 8(3) of the General Insurance Supervisory Levy Imposition Act 1998 mandates that the Minister determines the parameters of these components. For the 2011-12 financial year, the restricted levy component is calculated at 0.01594 per cent of the assets held by the entity, with a minimum of $4,700 and a maximum of $860,000. The unrestricted levy component is set at 0.008138 per cent of the entity's assets. For the special component, public/product liability insurers face a levy of 0.0192 per cent of their eligible premium income (EPI), with a minimum of $5,000 and a maximum of $50,000. Professional liability insurers are levied at 0.0154 per cent of their EPI, also subject to a minimum of $5,000 and a maximum of $32,000. Insurers offering both types of insurance face a combined levy calculated by summing the individual components, subject to the same minimum and maximum thresholds. Insurance companies must ensure their assets and EPI are accurately calculated in accordance with the determination to correctly determine their levy obligations. The levy amounts must be paid to the relevant authorities within the specified timeframe to avoid any penalties or additional charges. Failure to comply with the levy requirements can result in financial repercussions, including interest on unpaid amounts and potentially legal action. Under the Act, breaches of the levy obligations can lead to financial penalties, with the specifics of these penalties not detailed in the Explanatory Statement. The penalties are likely to be governed by the relevant sections of the General Insurance Supervisory Levy Imposition Act 1998 and could include fines or other civil or criminal consequences as stipulated by the Act. The maximum penalties are not specified in the Explanatory Statement, but they would be aligned with the provisions of the underlying legislation.