Notice imposing conditions on an authorisation to carry on insurance business in Australia 2021
– Credicorp Insurance Pty. Ltd.
Insurance Act 1973
To: Credicorp Insurance Pty. Ltd. ABN 50 069 196 756 (‘the general insurer’)
SINCE APRA issued to the general insurer an Authorisation under section 12(1) of the Insurance Act 1973 (‘the Act’) to carry on insurance business in Australia on 1 July 2002 (‘the Authorisation’);
I Brandon Kong Leong Khoo, Executive Director, under section 13(1)(a) of the Act, impose a condition on the Authorisation in the manner specified in the Schedule.
This instrument, and the condition set out in the Schedule that apply to the Authorisation, commences on the day it is made.
Dated: 6 September 2021
Brandon Kong Leong Khoo1 Executive Director Insurance Division
Interpretation
In this Notice
Act means the Insurance Act 1973.
APRA means the Australian Prudential Regulation Authority.
insurance business has the meaning given in subsection 3(1) of the Act.
1 A delegate of APRA.
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 condition on the Authorisation
The general insurer may only carry on insurance business in Australia for the purpose of discharging liabilities arising under policies issued by it on or before 2 October 2019.
Overview
The Insurance Act 1973, enacted by the Australian Parliament, provides a framework for the regulation of insurance business in Australia, aiming to ensure the financial stability and integrity of the insurance industry. The Act was introduced to address the need for a regulatory structure that protects policyholders and maintains the financial soundness of insurance companies. The Australian Prudential Regulation Authority (APRA) plays a key role under the Act by authorising insurers to operate and imposing conditions to safeguard the interests of policyholders. In this context, the Act aims to ensure that insurance companies meet certain standards of financial responsibility and operational conduct. The legislative instrument in question, dated 6 September 2021, imposes a specific condition on an authorisation granted to Credicorp Insurance Pty. Ltd., limiting the insurer's ability to carry on insurance business in Australia to discharging liabilities arising from policies issued before 2 October 2019. This condition reflects a regulatory response to specific circumstances affecting the insurer's operations.
Scope and Application
The Insurance Act 1973 applies to entities authorised to carry on insurance business in Australia, including Credicorp Insurance Pty. Ltd., which holds an authorisation from the Australian Prudential Regulation Authority (APRA). This authorisation is subject to specific conditions, including the limitation that the insurer may only carry on insurance business in Australia to discharge liabilities arising under policies issued on or before 2 October 2019. This restriction is imposed by the Executive Director of the Insurance Division under the Act, specifically targeting the insurer’s activities and ensuring compliance with the stipulated conditions. The legislation extends to the entire Commonwealth of Australia and applies to the conduct and transactions of authorised general insurers. There are no stated exclusions or exemptions in this context, but the scope of the authorisation and its conditions are clearly defined and regulated through subordinate instruments issued by APRA. The Act also provides for penalties for non-compliance and mechanisms for reconsideration and review of decisions by APRA.
Key Provisions
The key provisions of the Notice relate to the conditions imposed on the Authorisation for Credicorp Insurance Pty. Ltd. to carry on insurance business in Australia. According to the Act, the Executive Director of the Insurance Division, under section 13(1)(a), imposes a specific condition on the Authorisation, as detailed in the Schedule. This condition restricts the insurer to only carry on insurance business in Australia for the purpose of discharging liabilities arising under policies issued by it on or before 2 October 2019 (Schedule). This condition is effective from the date the Notice is made.
Under the Act, the general insurer has the obligation to comply with the conditions imposed on its Authorisation. Specifically, Credicorp Insurance Pty. Ltd. must adhere to the restriction that it may only conduct insurance business in Australia to settle liabilities from policies issued prior to 2 October 2019. Failure to comply with this condition could lead to serious legal consequences.
In the event of a breach of any condition imposed on the Authorisation under section 12 of the Act, the general insurer commits an offence. As per section 14(1), the penalty for such an offence is 300 penalty units. This serves as a deterrent against non-compliance and underscores the importance of adhering to the terms of the Authorisation. Additionally, under section 63(2) of the Act, Credicorp Insurance Pty. Ltd. has the right to request APRA to reconsider the decision imposing the condition. This request must be made in writing, within 21 days of receiving notice of the decision, or within any further period allowed by APRA. If dissatisfied with the reconsideration outcome, the insurer can seek review by the Administrative Appeals Tribunal, subject to the provisions of the Administrative Appeals Tribunal Act 1975.