General Insurance Supervisory Levy Imposition Determination 2016

Administered by Department of the Treasury

Legislation au F2016L01155 Not in force Legislative Instrument

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EXPLANATORY STATEMENT

General Insurance Supervisory Levy Imposition Determination 2016

This determination relates to a levy imposed by the General Insurance Supervisory Levy Imposition Act 1998 (the Act) on companies registered under the Insurance Act 1973.

This determination commences on 1 July 2016 and relates to the 2016‑17 financial year.  The General Insurance Supervisory Levy Imposition Determination 2015 is repealed upon commencement of this determination.  Consistent with section 7 of the Acts Interpretation Act 1901, any obligation or liability incurred in previous financial years remains valid.

The determination will commence before it is registered.  Commencement prior to registration, however, does not disadvantageously affect the rights of any person as at the date of registration or impose any liability on any person in respect of anything done or omitted to be done before the date of registration.  Commencement prior to registration is therefore consistent with subsections 12(2) and 12(3) of the Legislation Act 2003.

Subsection 8(1AA) of the Act specifies that the levy payable by a general insurance company for a financial year is to comprise of a general component and a special component.

2016‑17 General Component

For 2016‑17 financial year, the general component will fund the operations of the Australian Prudential Regulation Authority (APRA) and certain activities performed by the Australian Securities and Investments Commission.

In relation to the general component, subsection 8(3) of the Act requires the Treasurer, by legislative instrument, to determine:

(a)   the maximum restricted levy amount for each financial year;

(b)   the minimum restricted levy amount for each financial year;

(c)   the restricted levy percentage for each financial year;

(ca) the unrestricted levy percentage for each financial year; and

(d)   how a general insurance company’s levy base is to be worked out;

This determination provides that the restricted component of the 2016‑17 general levy will be calculated at 0.01124 per cent of assets held by the entity, subject to a minimum of $10,000 and a maximum of $1,064,000.  The unrestricted component of the 2016-17 general levy will be calculated at 0.017201 per cent of assets held by the entity.

2016‑17 Special Component Levy

For 2016‑17 financial year, the special component will fund the costs of the National Claims and Policy Database.  This component was levied for the first time in 2006‑07 following amendments to the General Insurance Supervisory Levy Imposition Act 1998.


In relation to the special component, subsection 8(3) of the Act allows the Minister to determine:

(e)   the special maximum levy amount for each financial year;

(f)    the special minimum levy amount for each financial year;

(g)   the special levy percentage for each financial year; and

(h)   how a general insurance company’s eligible premium income (EPI) is to be worked out.

This determination provides that for a public/product liability insurer the special levy amount will be calculated at 0.0323 per cent of the insurer’s EPI, subject to a minimum of $5,000 and a maximum of $50,000.  For a professional liability insurer the special levy amount will be calculated at 0.0235 per cent of the insurer’s EPI, subject to a minimum of $5,000 and a maximum of $32,000.

This determination provides that the special levy payable by an insurer that writes both public/product liability and professional indemnity insurance is determined by adding the sum of:

•                 0.0323 per cent of the insurer’s EPI, arising from public/product liability insurance, subject to a minimum of $5,000 and a maximum of $50,000; and

•                 0.0235 per cent of the insurer’s EPI, arising from professional indemnity insurance, subject to a minimum of $5,000 and a maximum of $32,000.

This determination provides that for either a public/product or professional indemnity runoff insurer the special levy amount will be $2,500.  For insurers that provide both public/product and professional indemnity runoff insurance, the special levy amount will be $5,000.

The finance sector has been consulted on the 2016‑17 supervisory levies through a Treasury and Australian Prudential Regulation Authority (APRA) discussion paper released on the Treasury website on 6 May 2016.  The paper discusses potential impacts of the levies on each industry sector and institution regulated by APRA.  Eight submissions were received during the consultation process, and no submission commented on the methodology under which the general insurance levy was calculated. 

The Office of Best Practice Regulation has previously advised that a Regulatory Impact Statement is not required as supervisory levies are considered machinery‑of‑government in nature. 

This determination is a legislative instrument for the purposes of the Legislative Instruments Act 2003.

A statement of compatibility with human rights for the purposes of Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 is set out in Attachment 1.


Attachment 1

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

General Insurance Supervisory Levy Imposition Determination 2016

 

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

 

Overview of the Legislative Instrument

This determination relates to a levy imposed by the General Insurance Supervisory Levy Imposition Act 1998 on companies registered under the Insurance Act 1973.

Subsection 8(1AA) specifies that the levy payable by a general insurance company for a financial year is to comprise of a general component and a special component.

In relation to the general component, subsection 8(3) allows the Minister to determine:

(i)     the maximum restricted levy amount for each financial year;

(j)     the minimum restricted levy amount for each financial year;

(k)   the restricted levy percentage for each financial year;

(ca) the unrestricted levy percentage for each financial year; and

(l)     how a general insurance company’s asset value is to be calculated;

 

Human rights implications

This Legislative Instrument does not engage any of the applicable rights or freedoms.

 

Conclusion

This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.

 

Overview

The General Insurance Supervisory Levy Imposition Determination 2016, which commenced on 1 July 2016, was enacted to facilitate the imposition of a levy under the General Insurance Supervisory Levy Imposition Act 1998 on companies registered under the Insurance Act 1973. This legislation addresses the need for funding to support the regulatory activities of the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission, as well as the operational costs of the National Claims and Policy Database. The determination is made by the Minister for Finance under subsection 8(3) of the Act and aims to ensure adequate resources are available for these regulatory functions. The levy for the 2016-17 financial year is composed of a general component, funding APRA and ASIC, and a special component, supporting the National Claims and Policy Database. The determination specifies the percentages and thresholds for calculating these components, ensuring a structured approach to levy imposition.

Scope and Application

The General Insurance Supervisory Levy Imposition Determination 2016 applies to general insurance companies registered under the Insurance Act 1973 and governed by the General Insurance Supervisory Levy Imposition Act 1998. This legislation imposes a financial levy on these companies for the 2016-17 financial year, comprising a general component and a special component. The general component funds the operations of the Australian Prudential Regulation Authority (APRA) and specific activities of the Australian Securities and Investments Commission, while the special component finances the costs of the National Claims and Policy Database. The levy is calculated based on the assets held by the entity for the general component and the eligible premium income for the special component, with specific percentages and thresholds applied. The levy is applicable nationally within Australia, affecting all registered general insurance companies without specific exclusions or exemptions, except for those outlined in the determination. The application of this levy extends through subordinate instruments, ensuring its comprehensive enforcement across the industry.

Key Provisions

The General Insurance Supervisory Levy Imposition Determination 2016, which is made under the General Insurance Supervisory Levy Imposition Act 1998, sets out the levy for the 2016-17 financial year. It comprises two components: a general component and a special component. The general component, outlined in section 8(1AA), is determined by the Treasurer and funds the operations of the Australian Prudential Regulation Authority (APRA) and certain activities of the Australian Securities and Investments Commission (ASIC). This component is calculated at a fixed percentage of the assets held by the general insurance company, with specific minimum and maximum thresholds. The special component, also specified in section 8(1AA), is determined by the Minister and is used to fund the costs of the National Claims and Policy Database. This component is calculated based on the insurer's eligible premium income (EPI), with specific rates and thresholds for different types of insurers, including public/product liability insurers, professional liability insurers, and runoff insurers. The obligations imposed by this determination on general insurance companies include the calculation and payment of the general and special components of the supervisory levy. Companies must determine their levy base by calculating the asset value or EPI as specified in the determination. They must then calculate the restricted and unrestricted components of the general levy and the special levy according to the percentages and thresholds set out in the determination. Companies are required to pay the calculated levies to the relevant authorities by the specified deadlines to ensure compliance with the Act. Breaches of the requirements set out in this determination may result in civil or criminal penalties. Although the determination itself does not specify penalties, the General Insurance Supervisory Levy Imposition Act 1998 provides for fines and other sanctions for non-compliance with levy obligations. The maximum penalties for offences under the Act can include significant financial penalties, reflecting the seriousness of ensuring that supervisory levies are accurately calculated and paid. Companies that fail to comply with their obligations may face legal action, including prosecution by regulatory authorities, which could result in substantial fines and other penalties.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.