EXPLANATORY STATEMENT
STATUTORY RULES 1985 NO. 189
AMENDMENT OF THE INSURANCE REGULATIONS ISSUED BY THE AUTHORITY OF THE MINISTER ASSISTING THE TREASURER
The Insurance Act 1973 (the Act) establishes an administrative system for the supervision of the conduct of general (non-life) insurance business in Australia by authorised insurance companies.
Section 132 of the Act empowers the Governor-General to make regulations, not inconsistent with the Act, prescribing all matters that are required or permitted by the Act to be prescribed or are necessary or convenient to be prescribed for carrying out or giving effect to the Act.
The purpose of the proposed regulations included in the Statutory Rules is to amend the existing Insurance Regulations consequent upon amendment of the Insurance Act 1973 by the Insurance Amendment Act 1983. Some machinery adjustments have also been effected which are considered necessary by the Insurance Commissioner to maintain effective supervision of the insurance industry.
The attachment provides relevant details.
ATTACHMENT
DETAILS OF PROPOSED REGULATIONS
Regulation 1 provides that new regulations 7, 16 and 17 shall come into operation on 1 October 1985. These regulations concern the lodgement of a revised quarterly return (Form 16) by authorised insurers with the Insurance Commissioner and this date has been selected to provide adequate lead time for insurers to adjust their computerised accounts to provide the required information.
Regulation 2 adds a new regulation 5A to provide that the information required to be submitted, in respect of the appointment of a person to act as auditor, in an application for the authorisation of a company to carry on insurance business is also required to be submitted when an authorised insurer makes application for appointment of another person to act as auditor in the place of the first appointed person. The reason for the change is also required to be furnished.
Regulation 3 amends the existing sub-regulation 6(2) to take account of amendments to sub-section 5(1) of the Companies Act 1981 by section 32 of the Companies (Miscellaneous) Amendments Act 1981 (No 92) relevant to the meaning of ‘prescribed interest’.
Regulation 4 amends the existing regulation 7, which requires the lodgement of prescribed documents on application for authorisation under the Insurance Act, to reflect that all applications from bodies corporate that carried on business prior to commencement of the Insurance Act on 1 August 1974 have been received.
Regulation 5 amends the existing regulation 8, which stipulates the valuation of assets procedure for an authorised insurer, to reflect that all applications from bodies corporate that carried on business prior to commencement of the Insurance Act on 1 August 1974 have been received.
Regulation 6 amends the existing regulation 10, which provides for the apportionment of receipts and payments between classes of insurance business, to take account of the revised definition of ‘accounts’.
Regulation 7 amends the existing regulation 11, which provides for various accounts and statements to be lodged with the Commissioner, consequent upon the introduction of a revised Form 16 (see Schedule 2) to be submitted by authorised insurers on a quarterly basis giving details of assets and liabilities, premiums and claims.
Regulation 8 amends the existing regulation 13 to reduce the numbers of copies of statutory forms required to be submitted by authorised insurers to the Office of the Insurance Commissioner. The Insurance Commissioner considers that one less copy would not hinder the administration of the Insurance Act and therefore from a cost and administration point of view the number of copies required for each form has been reduced by one.
Regulation 9 amends the existing regulation 16 to require the attachment to Form 4 - Annual Statement of Assets and Liabilities - of a statement providing particulars of the debtor in respect of each amount entered as a current asset on Form 4 where the debtor’s balance exceeds 10 per cent of the amount so entered. This will enable the Commissioner to determine whether the debtors’ balances are satisfactorily spread.
Regulation 10 provides for machinery amendments in respect of column references in Form 5 - Statement of Premium Income and Earned Premiums. Form 6 - Statement of Provision made for Claims - is also amended to require authorised insurers to submit annually, on a class by class basis, information relating to claims numbers in respect of direct business only. This information is currently requested on an informal basis from most insurers.
Regulation 11 amends the existing regulation 22 to replace the individual State Forms 11 - Statement of the Cost of Meeting Claims - for motor vehicle, compulsory third party and public liability classes of insurance business with ‘inside Australia’ Forms 11. The individual State returns in these classes do not assist in administration of the Act to any real extent as it has been found that the motor vehicle and public liability classes are essentially homogeneous between States while the compulsory third party class is now being written by a limited number of companies. The Form 11 is also extended to provide a further three years’ information on accident years (see regulation 15). There are a number of insurance portfolios that have not begun to taper off even by the eighth year following the accident year and extension of the form should provide sufficient information to monitor the run-off of these portfolios.
Regulation 12 amends the existing regulation 23 to provide:
• where items under Current Assets in Form 16 - Part A are marked with the symbol *, details of amounts owing where such amounts exceed 10 per cent of the total amount entered
• details of additions and deletions of assets and liabilities in Form 16 - Part A
• that Part C of Form 16 should only be lodged at the request of the Commissioner.
Regulation 13 amends Form 4 (Annual) - Statement of Assets and Liabilities - to reflect amendments, in respect to the period for which unpaid premiums may be counted as assets, made to the Insurance Act 1973 by the Insurance Amendment Act 1983.
Regulation 14 amends the Schedule by substituting the existing Form 6 - Statement of Provision Made for Claims - with a new Form 6 (see Schedule 1) requiring insurers to submit annually, on a class by class basis, information relating to claims numbers in respect of direct business, including inward facultative reinsurance claims in addition to existing requirements.
Regulation 15 amends Form 11 - Statement of the Cost of Meeting Claims - to extend by three years the information on accident years (see regulation 11).
Regulation 16 repeals the existing Form 14 - Monthly Statement of Premiums, Claims, Revenue and Expenses and of Policies Issued, Renewed, Cancelled and Terminated - which becomes redundant on the introduction of the new Form 16.
Regulation 17 substitutes the new Form 16 for the existing Form 16 (Schedule 2).
Regulation 18 amends the existing Form 17 to provide for minor changes to the titles of the classes of insurance business written by Lloyd’s.
Regulation 19 provides for machinery amendments to existing Regulations.