Notice imposing conditions on Authorisation to carry on insurance business
Insurance Act 1973
TO: AXIS Specialty Europe SE ABN 19 131 203 122 (the general insurer)
Level 21, 45 Clarence St, Sydney, NSW 2000
SINCE APRA issued to the general insurer an Authorisation to carry on insurance business in Australia under subsection 12(1) of the Insurance Act 1973 (the Act), on 19 May 2008 (the Authorisation);
I, Keith Chapman, a delegate of APRA, under paragraph 13(1)(a) of the Act, IMPOSE on the Authorisation the conditions specified in the attached Schedule.
Dated 11 March 2016
[Signed]
Keith Chapman
Executive General Manager Specialised Institutions Division
Interpretation Document ID: 221204
In this Notice
APRA means the Australian Prudential Regulation Authority. insurance business has the meaning given in section 3 of the Act. prudential standard has the meaning given in section 3 of the Act.
Note 1
Under subsection 13(1) of the Act, APRA may, at any time, by written notice to the general insurer
impose conditions or additional conditions or vary or revoke conditions imposed on the insurer's authorisation under section 12 of the Act. The conditions must relate to prudential matters.
Note 2
Under subsection 13(2) of the Act, a condition may be expressed to have effect despite anything in
the prudential standards.
Note 3
Under subsection 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 4
Under subsection 14(1) of the Act, a general insurer commits an offence if:
(a) the insurer does an act or fails to do an act; and
(b) doing the act or failing to do the act results in a contravention of a condition of the insurer's authorisation under section 12 of the Act; and
(c) there is no determination in force under subsection 7(1) of the Act, that subsection 14(1) of the Act does not apply to the insurer.
The penalty is 300 penalty units. Under subsection 14(1A) of the Act, where an individual commits an offence against subsection 14(1) of the Act, because of Part 2.4 of the Criminal Code or commits an offence under Part
2.4 of the Criminal Code in relation to an offence against subsection 14(1) of the Act, the individual is punishable, on conviction, by a penalty not exceeding 60 penalty units. Under subsection 14(2) of the Act, an offence against section 14 of the Act, is an offence of strict liability.
Note 5
Under subsection 13(6) of the Act, a decision to impose conditions, or additional conditions, on the
Authorisation is a reviewable decision to which Part VI of the Act applies. If you are dissatisfied with this decision, you may seek reconsideration of the decision by APRA in accordance with subsection 63(2) of the Act. The request for reconsideration must be in writing, must state the reasons for the request, and must be given to APRA within 21 days after the decision first comes to your notice or within such further period as APRA allows. If dissatisfied with APRA’s reconsidered decision confirming or varying the first decision, you may, subject to the Administrative Appeals Act 1975, apply to the Administrative Appeals Tribunal for review of the reconsidered decision.
The address where written notice may be given to APRA is Level 26, 400 George Street, Sydney, NSW 2000.
Schedule - the conditions on the Authorisation
(1) 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 8 October 2015.
(2) The general insurer is to comply with the requirements of APRA’s Prudential Standards applying to a Run-off insurer under Prudential Standard GPS 001 Definitions.
Overview
The Insurance Act 1973 was enacted to establish a legislative framework governing the insurance industry in Australia, addressing the need for regulation and oversight to protect policyholders and ensure the financial stability of insurance companies. The Act provides the Australian Prudential Regulation Authority (APRA) with the power to supervise and regulate authorised general insurers, including the ability to impose, vary, or revoke conditions on their authorisations to carry on insurance business. This regulatory approach aims to safeguard the interests of policyholders and maintain confidence in the insurance sector. The policy objective of the Act is to ensure the financial soundness of insurers, thereby protecting the interests of policyholders and maintaining the stability of the financial system. The Act empowers APRA to enforce compliance with prudential standards and to penalise non-compliance through the imposition of fines and other penalties.
Scope and Application
The Insurance Act 1973 governs the regulation of the insurance industry in Australia and applies to any person or entity carrying on insurance business in the country. Under this Act, the Australian Prudential Regulation Authority (APRA) can impose conditions on an authorisation to carry on insurance business. In this particular case, APRA has imposed conditions on AXIS Specialty Europe SE’s Authorisation to carry on insurance business in Australia. The conditions outlined in the attached schedule are specific to the insurer's operations, limiting the scope of their insurance business to discharging liabilities arising from policies issued by the insurer on or before a certain date. These conditions are designed to ensure that the insurer's activities remain within a defined scope and comply with APRA's Prudential Standards applicable to a Run-off insurer. APRA's authority to impose these conditions is derived from the Act, which allows for the regulation of prudential matters concerning insurers. Any contravention of these conditions can lead to significant penalties, and the Act provides a clear legal framework for enforcement and review processes.
Key Provisions
The main operative sections of the Notice impose conditions on the Authorisation to carry on insurance business in Australia granted to AXIS Specialty Europe SE under the Insurance Act 1973 (the Act). Specifically, section 13 of the Act provides APRA with the authority to impose, vary, or revoke conditions on an authorisation. The Notice, dated 11 March 2016, imposes specific conditions on the authorisation that AXIS Specialty Europe SE holds, which relate to prudential matters as outlined in the attached Schedule.
The obligations and requirements imposed by the Act on AXIS Specialty Europe SE include adhering to the conditions specified in the Schedule attached to the Notice. These conditions dictate that AXIS Specialty Europe SE can only carry on insurance business in Australia to discharge liabilities arising under policies issued by it on or before 8 October 2015. Furthermore, AXIS Specialty Europe SE must comply with the requirements of APRA’s Prudential Standards applicable to a Run-off insurer under Prudential Standard GPS 001 Definitions. This ensures that the insurer operates within the prudential guidelines set forth by APRA to safeguard policyholder interests.
The Act imposes several consequences for breaches of its provisions. Under subsection 14(1) of the Act, a general insurer commits an offence if it performs an act or fails to perform an act that results in a contravention of a condition of its authorisation, unless a specific determination is in force under subsection 7(1) of the Act. The penalty for such an offence is 300 penalty units. Additionally, under subsection 14(1A) of the Act, if an individual commits an offence under this provision, they are punishable by a penalty not exceeding 60 penalty units. These offences are of strict liability, meaning that intent or negligence does not need to be proven for a conviction to occur. The decision to impose conditions on the authorisation is also a reviewable decision under Part VI of the Act, allowing for reconsideration or appeal if dissatisfied with the decision.
The Notice also outlines the process for seeking reconsideration of the decision by APRA and the subsequent right to apply to the Administrative Appeals Tribunal for review if further dissatisfied. Written notice of any reconsideration request must be provided to APRA within 21 days of the decision coming to the insurer’s notice, or within any extended period allowed by APRA. This ensures that there is a clear and accessible pathway for the insurer to challenge the imposed conditions if they believe them to be unjust or improperly applied.