Life Insurance Act Regulations (Amendment) 1995 No. 317
EXPLANATORY STATEMENT
Statutory Rules 1995 No. 317
Issued by Authority of the Treasurer
Life Insurance Act 1995
Life Insurance Act Regulations (Amendment)
Section 253 of the Life Insurance Act 1995 (the Act) provides that the Governor-General may make regulations for the purposes of the Act.
The Act provides for the prudent management of life companies and for their supervision by the Insurance and Superannuation Commissioner.
The amendments are the second round of regulations made under the Act. They supplement the first round of regulations (identified as the core regulations required from the commencement of the Act), which commenced operation coincident with the Act on 1 July 1995.
The four areas covered by these amendments to the regulations are:
1. the notice to be provided to the Commissioner on the establishment of a new statutory fund where there is no transfer of business out of an old statutory fund.
2. the notice to be provided to the Commissioner on the establishment of a new statutory fund out of the division of an old statutory fund.
3. the system of documentation to be provided by life companies to the Commissioner in relation to unclaimed money.
4. the requirements for the new public register of life companies to be kept by the Insurance and Superannuation Commission.
The regulation amendments have been developed in consultation with representatives of the life insurance industry.
The commencement date of the amendments is the date of gazettal.
Details of the amendments are attached.
ATTACHMENT
Details of the Life Insurance Regulations (Amendment)
PART 4 - STATUTORY FUNDS OF LIFE COMPANIES
Regulation 4.00 - Notice of establishment of statutory fund
Regulation 4.00 identifies types of information that a life company must provide to the Commissioner in a notice of the establishment of a new statutory fund on the commencement of the business of that statutory fund.
The regulation requires particulars of:
(1) the operational structure of the fund, including the classes of life insurance business to be carried on by the company within the statutory fund (subsection 12(1) of the Act states that ordinary business and superannuation business, which are both defined in the Dictionary in the Schedule, are classes of life insurance business); the categories of life insurance business to be carried on within each of those classes (which means that the business must be identified as participating or non-participating in the profits of the company - as prescribed in subsections 75(2) and (3) of the Act); and the kinds of policies to be written by the company within those categories.
(2) the financing of new life business, including the proposed financing arrangements for the writing of new life business referable to the statutory fund of the company, and the projections of the company's life business referable to the statutory fund for either the period of the financing arrangements for that business, or for 10 years if that is the longer period. The notice must also include a statement by the appointed actuary of the accuracy of those projections.
Subregulation (2) provides that notice to the Commissioner of the establishment of the statutory fund must be provided within 14 days and in writing.
Regulation 1.02 - Notice of division of statutory fund
Regulation 4.02 provides that where a life company establishes a new statutory fund in respect of a part of the life insurance business of an existing statutory fund, the company must give the Commissioner, within 6 weeks of the establishment of the fund, written notice of the nature and terms of the establishment of the new fund, the nature and value of the assets transferred from the old fund to the new fund, the kinds of policies that are referable to the new fund, and that the notice should be accompanied by certified statements by the principal executive officer, the appointed actuary and the auditor that the new fund has been established in accordance with section 52 of the Act.
The purpose of the notice is to substantiate that the establishment of the new fund occurred in accordance with the approvals given by the Commissioner.
It is noted that the requirement to provide details of the nature and value of the assets transferred anticipates details by major asset classes (for example, shares or property). Similarly the requirement to provide details of the kinds of policies referable to the new fund anticipates details of liabilities by product type or product grouping if appropriate.
PART 10 - PROVISIONS RELATING TO POLICIES
Regulation 10.05A - Unclaimed money - statement
Regulation 10.05A and Forms 3, 4 and 5 in Schedule 4 prescribe the requirements placed upon companies for statements for unclaimed money to be provided to the Insurance and Superannuation Commissioner under the Act.
The regulation describes two separate statements - firstly under subsection 216(1), a statement required within three months of the end of the calendar year of the company's unclaimed money as at the end of the year, and secondly under subsection 216(4), a statement of payments made since the end of the calendar year by the company of unclaimed money to persons to whom the amounts were due.
Subregulation 10.05A(1) requires that if a statement is provided for the purposes of section 216 and contains 50 or more items then it must be recorded on computer disk. If there are less than 50 items then the company has the option of providing a paper statement or a statement on disk.
Subregulation (2) refers to the statement required under subsection 216(1) of the Act and prescribes the particulars which must be provided for each policy for which money is unclaimed. These are the policy number, the full name/s of the live/s insured, the last known address of the live/s insured, similar details for the policy owner, the amount due to the policy owner, the date the amount became due, and the State or Territory for which the policy is registered. The subregulation also requires particulars of the total number and total value of unclaimed policies of the company.
Subregulation (3) refers to the statement required under subsection 216(4) of the Act, and requires that the statement include details of the policy number, the full name of the claimant, the date of the claim, the date the claim was paid, and the amount paid. The subregulation also requires particulars of the total number and total value of policies claimed since the end of the calendar year.
If either statement is recorded on disk then subregulation (4) requires that it be accompanied by a paper form in accordance with Form 5 entitled 'Unclaimed money disk lodgment form'.
Regulation 11.00 - Form and content of Register of Life Companies
Section 240 of the Act requires that the Commissioner maintain a Register of Life Companies. This Register will be maintained on computer, and the prescribed information in respect of each company which is held on the Register is publicly available information. Regulation 11.00 prescribes the details for each company which must be included in the Register, including:
• the location of the head office.
• the State or Territory in which it is registered under the Corporations Law.
• each name under which it carries on life business in a State or Territory.
• any other registered name used by it in a State or Territory.
• the names and addresses of the principal executive officer, each director, the secretary, the auditor and the appointed actuary.
• overseas countries in which the company carries on life insurance business.
• the company's financial year.
• the date the company was registered under the Act.