Insurance (prudential standard) determination No. 1 of 2018

Administered by Department of the Treasury

Legislation au F2018L00486 Not in force Legislative Instrument

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Insurance (prudential standard) determination No. 1 of 2018

EXPLANATORY STATEMENT

Prepared by the Australian Prudential Regulation Authority (APRA)

Insurance Act 1973, section 32

Under subsection 32(1) of the Insurance Act 1973 (the Act), APRA has the power to determine standards (prudential standards), in writing, in relation to prudential matters to be complied with by general insurers.

On 13 April 2018, APRA made Insurance (prudential standard) determination No.  1 of 2018 (the instrument) which makes Prudential Standard GPS 410 Transfer and Amalgamation of Insurance Business for General Insurers (GPS 410).

The instrument commences on the date it is registered on the Federal Register of Legislation (FRL).

1. Background

GPS 410 sets out for procedural matters to be met by general insurers when transferring insurance business iunder Division 3A of Part III of the Act. Division 3A of Part III of the Act provides that insurance business of a general insurer authorised under the Act may be transferred to a similarly authorised general insurer or amalgamated with the business of another general insurer. The Division provides that the business is transferred or amalgamated by a scheme that is to be confirmed by the Federal Court.

2. Purpose and operation of the instruments

The purpose of the instrument is to remake without change Prudential Standard GPS 410 Transfer and Amalgamation of Insurance for General Insurers (original GPS 410) made on 7 February 2002 by Insurance Act 1973 - Determination of Prudential Standards - GPS 110 - Capital Adequacy for General Insurers; GPS 120 - Assets in Australia for General Insurers; GPS 210 - Liability Valuation for General Insurers; GPS 220 - Risk Management for General Insurers; GSP 230 - Reinsurance Arrangements for General Insurers; GPS 410 - Transfer and Amalgamation of Insurance Business for General Insurers and Transitional Prudential Standard GPS 900- Early Approvals of Auditors and Actuaries (FRL registration number F2006B01543).

The original GPS 410 was mistakenly labelled on the Federal Register of Legislation as having been repealed on 1 January 2007 by Insurance (prudential standard) determination No. 7 of 2006 – Prudential Standard GPS 110 – Capital Adequacy. GPS 410 was consequently not included in the lists of sunsetting legislative instruments prepared by the Attorney- General under section 52 of the Legislation Act 2003 (Legislation Act). It was not therefore identified for remaking and was repealed on 1 October 2016 by operation of subsection 50(1) of the Legislation Act. It was not APRA’s intention that the original GPS 410 be allowed to sunset. The Office of Parliamentary Counsel have acknowledged the error but advised there is no way in which the operation of GPS 410 can be continued other than by remaking it.

Division 3A of Part III of the Act provides that certain procedural matters are to be carried out in accordance with Prudential Standards that are to be made by APRA under section 32 of the Insurance Act. GPS 410 was the prudential standard that set out those procedural requirements, which were:

(i) when a copy of the scheme and any actuarial reports should be given to APRA;

(ii) how a notice of intention to transfer the insurance business was to be published, and what was required to be in the notice;

(iii) the minimum content to be included in a summary of the scheme that is provided to affected policyholders;

(iv) when an application for confirmation can be made to the court; and

(v) the documents that are to be provided to APRA after the transfer is completed.

Consultation

As GPS 410 is being remade unchanged, APRA did not consult externally in relation to the instruments.  This was also in part due to the urgency of reintroducing a procedural framework for the transfers of insurance business.

Regulation Impact Statement

The Office of Best Practice Regulation has advised that a Regulation Impact Statement is not required for the instrument.  OBPR also advised that it was not necessary to provide a certification letter as outlined in the guidance note for Sunsetting Legislative Instruments

Statement of compatibility prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

A statement of compatibility prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 is provided at Attachment A to this Explanatory Statement.


Attachment A

 

Statement of Compatibility with Human Rights

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

 

Insurance (prudential standard) determination No. 1 of 2018

 

The Legislative Instruments 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 Instruments

 

The purpose of the instrument is to remake without change Prudential Standard GPS 410 Transfer and Amalgamation of Insurance for General Insurers (GPS 410) made on 7 February 2002.

 

Division 3A of Part III of the Insurance Act 1973 (Insurance Act) provides that insurance business of a general insurer authorised under the Insurance Act may be transferred to a similarly authorised general insurer or amalgamated with the business of another general insurer. The Division provides that the business is transferred or amalgamated by a scheme that is to be confirmed by the Federal Court.

The Division provides that certain procedural matters are to be carried out in accordance with Prudential Standards that are to be made by APRA under section 32 of the Insurance Act. GPS 410 was the prudential standard that set out those procedural requirements, which were:

(i) when a copy of the scheme and any actuarial reports should be given to APRA;

(ii) how a notice of intention to transfer the insurance business was to be published, and what was required to be in the notice;

(iii) the minimum content to be included in a summary of the scheme that is provided to affected policyholders;

(iv) when an application for confirmation can be made to the court; and

(v) the documents that are to be provided to APRA after the transfer is completed.

Human rights implications

APRA has assessed the instrument and is of the view that it does not engage any of

the applicable rights or freedoms recognised or declared in the international

instruments listed in section 3 of the HRPS Act. Accordingly, in APRA’s assessment,

the instrument is compatible with human rights.

Conclusion

These Legislative Instruments are compatible with human rights as they do not raise any human rights issues.

Overview

The Insurance (prudential standard) determination No. 1 of 2018 was enacted by the Australian Prudential Regulation Authority (APRA) under section 32 of the Insurance Act 1973. The primary objective of this legislation was to address a gap in the regulatory framework that resulted from the mistaken repeal of Prudential Standard GPS 410, which pertains to the procedural requirements for transferring and amalgamating insurance business among general insurers. This oversight led to the unintentional sunsetting of GPS 410 on 1 October 2016. To rectify this, APRA remade GPS 410 without any changes to reinstate the necessary procedural standards, ensuring that general insurers could continue to comply with the mandated requirements for transferring or amalgamating their business as outlined in Division 3A of Part III of the Insurance Act. The determination aims to reinstate the procedural framework established by GPS 410, including the timing and content for providing copies of transfer schemes and actuarial reports to APRA, the publication requirements for notices of intention to transfer insurance business, the minimum content for summaries provided to affected policyholders, the timing for court applications for scheme confirmation, and the documentation to be submitted to APRA post-transfer. This legislative instrument ensures that the regulatory environment remains robust and effective, thereby protecting the interests of policyholders and maintaining the stability of the insurance sector.

Scope and Application

The Insurance (prudential standard) determination No. 1 of 2018, issued by the Australian Prudential Regulation Authority (APRA) under section 32 of the Insurance Act 1973, pertains specifically to general insurers in Australia, regulating the procedural requirements for the transfer and amalgamation of insurance business. This legislation applies to all general insurers authorised under the Insurance Act, ensuring that any transfers or amalgamations of their insurance business are conducted in a manner that complies with the prudential standards set out by APRA. The instrument's geographic reach is nationwide, affecting all authorised general insurers operating within Australia, irrespective of their location or the size of their business. The instrument does not include any specific exclusions or exemptions, and it extends its application uniformly across all authorised general insurers. Additionally, APRA may extend or restrict the application of this Act through subordinate instruments, although such extensions or restrictions are not detailed in this particular determination. The legislative instrument is designed to ensure that the procedural framework governing the transfer and amalgamation of insurance business is maintained and properly enforced.

Key Provisions

The Insurance (prudential standard) determination No. 1 of 2018, made under the authority of section 32(1) of the Insurance Act 1973, reintroduces Prudential Standard GPS 410 Transfer and Amalgamation of Insurance Business for General Insurers (GPS 410) without any changes. This prudential standard sets out the procedural requirements that general insurers must follow when transferring or amalgamating their insurance business, as outlined in Division 3A of Part III of the Act. This Division permits the transfer or amalgamation of insurance business between similarly authorised general insurers, subject to the approval of the Federal Court through a scheme. The Act imposes specific obligations on general insurers regarding the procedural aspects of transferring or amalgamating their insurance business. These obligations include providing APRA with a copy of the scheme and any relevant actuarial reports, publishing a notice of intention to transfer the business, and providing a summary of the scheme to affected policyholders. Insurers must also ensure that an application for court confirmation is made within the specified timeframe and submit the required documents to APRA post-transfer. Failure to comply with these requirements could lead to regulatory scrutiny and potential enforcement actions by APRA. For breaches of the provisions outlined in GPS 410, the primary consequences would be regulatory in nature. APRA would likely take action against non-compliant insurers, which could include issuing directions, imposing fines, or even revoking the insurer’s authorisation under the Act. The specific penalties for non-compliance are not detailed in the instrument itself but would be in line with the general powers granted to APRA under the Insurance Act 1973. The severity of the penalties would depend on the nature and extent of the non-compliance, with potential civil and criminal consequences for particularly egregious or repeated breaches.

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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.