Notice imposing conditions on a registration to carry on life insurance business in Australia – St Andrew’s Life Insurance Pty Ltd
Life Insurance Act 1995
To: St Andrew’s Life Insurance Pty Ltd ABN 98 105 176 243 9 (‘the life insurer’)
Since APRA issued to the life insurer a registration under section 21 of the Act to carry on life insurance business in Australia on 15 December 2003 (‘the Registration’), I Sharyn Reichstein, a delegate of APRA, under section 22(1)(a) of the Act, impose conditions on the Registration in the manner specified in the Schedule.
This instrument, and the conditions imposed on the Registration, commences on the day the instrument is made.
Dated: 19 October 2021
[Signed]
Sharyn Reichstein
Acting Executive Director Insurance Division
Interpretation
In this notice
Act means the Life Insurance Act 1995.
APRA means the Australian Prudential Regulation Authority.
life insurance business has the meaning given in section 11 of the Act.
Notes
Note 1 Under section 13(4) of the Act, if APRA imposes conditions on a general insurer’s authorisation, APRA must give written notice to the insurer and ensure that notice that the action has been taken is published in the Gazette.
Note 2 Under section 14(1) of the Act, a general insurer commits an offence if the insurer does an act or fails to do an act and doing the act or failing to do the act results in a contravention of a condition of the insurer’s authorisation under section 12 and there is no determination in force under subsection 7(1) that this subsection does not apply to the insurer. The penalty is 300 penalty units.
Note 3 You may request APRA reconsider the decision in accordance with section 63(2) of the Act. The request for reconsideration must be made in writing, must set out the reasons for making the request, and must be given to APRA within 21 days after the day on which you first received notice of this decision, or within such further period as APRA allows. If you are dissatisfied with the outcome of APRA’s reconsideration of the decision, you may, subject to the Administrative Appeals Tribunal Act 1975, apply to the Administrative Appeals Tribunal for review of the reconsidered decision.
Schedule – the conditions
- The life insurer must:
- only carry on life insurance business for the purposes of discharging liabilities under its current policies or policies that are issued, renewed, reinstated or varied pursuant to a right under a current policy to enter into, renew, reinstate or vary a current policy; and
b. not issue any new life insurance policies without APRA’s prior written agreement.
2. The life insurer may only seek APRA’s agreement to it issuing new life insurance policies after it has delivered to APRA, an updated ICAAP report taking into account the life insurer’s plans for the issuance of new life insurance policies and such other information APRA requires.
current policy refers to a policy issued on or before 18 October 2021.
Overview
The Life Insurance Act 1995, enacted by the Parliament of Australia, addresses the regulation of life insurance businesses to ensure financial stability and consumer protection. This Act empowers the Australian Prudential Regulation Authority (APRA) to regulate the operations of life insurers, including imposing conditions on their registrations. In this context, APRA has issued a notice under the authority granted by section 22(1)(a) of the Act, imposing specific conditions on St Andrew’s Life Insurance Pty Ltd’s registration to carry on life insurance business. The primary objective of this notice is to restrict the insurer’s activities to discharging liabilities under existing policies and to prevent the issuance of new policies without APRA’s explicit approval, thereby maintaining the insurer’s solvency and protecting policyholders. The conditions are designed to mitigate risks associated with the insurer's operations and ensure compliance with regulatory standards.
Scope and Application
The notice imposes conditions on St Andrew’s Life Insurance Pty Ltd's registration to carry on life insurance business in Australia, issued by Sharyn Reichstein, a delegate of APRA, under the Life Insurance Act 1995. The conditions apply to the life insurer, specifically restricting it to only discharging liabilities under its current policies or those issued, renewed, reinstated, or varied pursuant to rights under a current policy. The life insurer is also prohibited from issuing any new life insurance policies without APRA's prior written agreement. These conditions aim to ensure the insurer adheres to the regulatory standards set by APRA for the protection of policyholders. The Act applies nationally across Australia, impacting the conduct and transactions of entities registered to carry on life insurance business. The notice is effective from the date of its issuance, 19 October 2021, and any failure to comply with the imposed conditions may result in the life insurer committing an offence, with a penalty of 300 penalty units. The life insurer has the right to request APRA reconsider the decision and, if dissatisfied with the outcome, apply to the Administrative Appeals Tribunal for review.
Key Provisions
The Life Insurance Act 1995, under which the notice imposing conditions on St Andrew’s Life Insurance Pty Ltd's registration to carry on life insurance business was made, mandates that the life insurer can only conduct its business to discharge liabilities under its current policies or those issued, renewed, reinstated, or varied pursuant to a right under a current policy (Schedule, condition 1(a)). Additionally, the life insurer is prohibited from issuing any new life insurance policies without obtaining prior written agreement from APRA (Schedule, condition 1(b)). The life insurer may only request APRA's agreement to issue new life insurance policies after delivering to APRA an updated ICAAP (Internal Capital Adequacy Assessment Process) report that considers the life insurer's plans for new policy issuances, along with any other information APRA requires (Schedule, condition 2).
The Act imposes several obligations on St Andrew’s Life Insurance Pty Ltd. The life insurer must ensure that its operations strictly adhere to the conditions outlined in the Schedule. Specifically, it must limit its activities to existing policy liabilities and refrain from issuing new policies without APRA's consent. Furthermore, any request to issue new policies must be preceded by the submission of an updated ICAAP report and any additional information required by APRA. This ensures that the life insurer maintains adequate capital and risk management practices, safeguarding policyholders’ interests.
In the event of non-compliance, the life insurer may face significant penalties. Under section 14(1) of the Act, a contravention of a condition of the insurer’s authorisation, such as failing to adhere to the imposed conditions, constitutes an offence. The penalty for such an offence is a fine of up to 300 penalty units, which, as of the time of writing, equates to approximately AUD 63,000. This stringent penalty underscores the importance of adhering to the regulatory framework designed to protect policyholders and maintain the stability of the insurance market.