Notice imposing conditions on an authorisation to carry on insurance business in Australia – Catholic Church Insurance Limited
Insurance Act 1973
To: Catholic Church Insurance Limited ABN 76 000 005 210 (‘the general insurer’)
Since APRA issued the general insurer on 26 June 2022 an authorisation to carry on insurance business in Australia under subsection 12(2) of the Insurance Act 1973 (the Act) (the authorisation), I, Sean Carmody, a delegate of APRA, under paragraph 13(1)(a) of the Act, impose a condition on the authorisation in the manner specified in the Schedule.
This notice, and the condition set out in the Schedule that apply to the authorisation, commence on and from the date this instrument is made.
Dated: 6 July 2023
Sean Carmody Executive Director Insurance Division
Interpretation
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.
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 condition
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 15 June 2023.
Overview
The Insurance Act 1973 was enacted to regulate the insurance industry in Australia, providing a framework for the operation of insurance companies and ensuring consumer protection and financial stability within the sector. The Act was introduced to address the need for comprehensive regulation to protect policyholders and maintain the integrity of the insurance market. This legislation is administered by the Australian Prudential Regulation Authority (APRA), which has the responsibility of overseeing the authorisation and conditions under which insurance businesses operate in Australia. The primary policy objective of the Act is to ensure that insurance companies maintain adequate financial resources and conduct their business in a prudent manner, thereby safeguarding the interests of policyholders. The Act empowers APRA to impose conditions on the authorisation of general insurers, as seen in the notice to Catholic Church Insurance Limited, ensuring compliance with regulatory standards and maintaining the stability of the insurance market.
Scope and Application
The notice issued by Sean Carmody, a delegate of the Australian Prudential Regulation Authority (APRA), imposes a condition on the authorisation of Catholic Church Insurance Limited (ABN 76 000 005 210) to carry on insurance business in Australia. This notice, made under subsection 12(2) of the Insurance Act 1973, stipulates that the general insurer may only carry on insurance business for the purpose of discharging liabilities arising under policies issued by it on or before 15 June 2023. This means that any new policies issued after this date would not be covered by the insurer’s authorisation, thereby restricting its insurance activities. The notice is required by section 13(4) of the Act to be given in writing to the insurer and published in the Gazette, ensuring transparency and compliance. Furthermore, under section 14(1) of the Act, the insurer commits an offence if it contravenes any condition of its authorisation, with a penalty of 300 penalty units. The insurer has the right to request APRA to reconsider the decision within 21 days of receiving notice, or within any extended period allowed by APRA, and may subsequently seek review by the Administrative Appeals Tribunal if dissatisfied with the reconsideration outcome.
Key Provisions
The primary sections of the Insurance Act 1973 relevant to this notice are sections 12, 13, and 14. Section 12(2) provides the basis for the authorisation that Catholic Church Insurance Limited (CCIL) has been granted to carry on insurance business in Australia, while section 13(1)(a) allows a delegate of the Australian Prudential Regulation Authority (APRA) to impose conditions on such authorisations. The specific condition imposed in this instance is detailed in the Schedule, which restricts CCIL's insurance business to discharging liabilities arising under policies issued on or before 15 June 2023.
This notice imposes a significant restriction on CCIL's operations, limiting its ability to conduct insurance business in Australia to the sole purpose of discharging liabilities under existing policies. This means that CCIL cannot offer new insurance products or services, or accept new clients, until the condition is lifted or otherwise modified. The obligation on CCIL is clear: they must comply with the restriction set out in the Schedule and ensure that all activities align with this limitation.
Under the Act, any breach of the condition imposed by APRA is an offence. Specifically, section 14(1) states that if CCIL does an act or fails to do an act resulting in a contravention of the condition of its authorisation, and there is no determination in force under section 7(1) exempting CCIL from this provision, it commits an offence. The penalty for such an offence is substantial, with a maximum penalty of 300 penalty units. Given that each penalty unit is currently set at $222 as of July 2023, the maximum financial penalty amounts to $66,600.
In addition to the criminal penalties, CCIL has the right to request reconsideration of APRA's decision under section 63(2) of the Act. Any request must be made in writing, outline the reasons for the request, and be submitted to APRA within 21 days of receiving notice of the decision, or within any extended period allowed by APRA. If CCIL remains dissatisfied with the outcome of APRA's reconsideration, it may apply to the Administrative Appeals Tribunal for further review, subject to the provisions of the Administrative Appeals Tribunal Act 1975.