Notice imposing conditions on Authorisation to carry on insurance business
Insurance Act 1973
TO: FM Insurance Company Limited ABN 99 007 502 829 (the general insurer)
Level 37, 140 William Street, Melbourne VIC 3000
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 17 June 2002 (the Authorisation);
I, Keith David 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 29 February 2016
[Signed]
Keith David Chapman Specialised Institutions Division Executive General Manager
Interpretation Document ID: 220373
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 .
Schedule - the conditions 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 30 September 2014.
Overview
The Insurance Act 1973, enacted by the Commonwealth Parliament, governs the authorisation and operation of insurance businesses in Australia. It was introduced to address the need for regulation and oversight of the insurance industry to protect policyholders and maintain financial stability. Keith David Chapman, as a delegate of the Australian Prudential Regulation Authority (APRA), has imposed certain conditions on FM Insurance Company Limited's authorisation to carry on insurance business, as per the authority granted under the Act. The primary policy objective is to ensure that the insurer adheres to prudential standards and regulatory requirements, thereby safeguarding the interests of policyholders and maintaining the integrity of the insurance market. APRA's ability to impose, vary, or revoke conditions on an insurer's authorisation underscores its role in enforcing prudential standards and ensuring compliance within the industry.
Scope and Application
The Insurance Act 1973 governs the insurance industry in Australia, providing a regulatory framework for the authorisation, operation, and oversight of insurance businesses. The Act applies to entities authorised to carry on insurance business in Australia, including general insurers like FM Insurance Company Limited, which has been granted an authorisation by the Australian Prudential Regulation Authority (APRA). The conditions imposed on this authorisation under the Act pertain to prudential matters and are intended to safeguard the interests of policyholders and the broader financial system. The Act applies across the Commonwealth of Australia, ensuring a consistent regulatory approach to the insurance industry nationwide. While the Act provides a comprehensive regulatory framework, certain exclusions and exemptions may apply depending on the nature and scope of the insurance business. The Act also allows for the extension or restriction of its application through subordinate instruments, which can introduce additional conditions or modify existing ones to address emerging risks or regulatory needs. The imposition of conditions on an insurer's authorisation is subject to review and appeal processes, providing avenues for recourse in cases of dissatisfaction with the regulatory decisions.
Key Provisions
The Notice imposing conditions on the authorisation to carry on insurance business outlines specific conditions that must be adhered to by the FM Insurance Company Limited. Section 13(1) of the Insurance Act 1973 allows the Australian Prudential Regulation Authority (APRA) to impose conditions on an authorisation, and these conditions must relate to prudential matters. The conditions specified in this Notice require that the insurer can only carry on insurance business for the purpose of discharging liabilities arising under policies issued by it on or before 30 September 2014.
The obligations imposed by this Act on the general insurer include strict compliance with the conditions outlined in the Notice. These conditions must be observed in the operation of the insurance business, and failure to do so could result in legal repercussions. The insurer is also required to adhere to any additional conditions that APRA may impose in the future, which must be communicated in writing and published in the Gazette as per section 13(4) of the Act.
In the event of non-compliance with the conditions imposed, the general insurer commits an offence under section 14 of the Act. An offence is constituted if the insurer either does an act or fails to do an act that results in a contravention of a condition of its authorisation, and there is no determination in force that exempts the insurer from the offence. The maximum penalty for such an offence is 300 penalty units. If an individual commits an offence under this section, they are punishable by a penalty not exceeding 60 penalty units. It is important to note that these offences are of strict liability, meaning intent does not need to be proven for a conviction. Additionally, decisions to impose conditions on the authorisation are reviewable, providing avenues for reconsideration and appeal under the Administrative Appeals Act 1975.