NOTICE OF INTENTION TO APPLY TO THE FEDERAL COURT OF AUSTRALIA FOR CONFIRMATION OF A SCHEME FOR THE TRANSFER OF THE INSURANCE BUSINESS OF REALCOVER INSURANCES PTY LIMITED TO QBE INSURANCE (AUSTRALIA) LIMITED UNDER DIVISION 3A OF PART III OF THE INSURANCE ACT 1973 (CTH).
TAKE NOTICE that QBE Insurance (Australia) Limited ACN 003 191 035 (QBE) intends to make an application to the Federal Court of Australia in Sydney on 26 June 2020 at 8:30AM, for confirmation of a scheme to transfer the insurance business written or assumed by Realcover Insurances Pty Limited ACN 103 975 355 (Realcover) to QBE (Scheme).
QBE and Realcover are incorporated in Australia. QBE is authorised under the Insurance Act 1973 (Cth) to carry on insurance business in Australia. Realcover is authorised under the Insurance Act 1973 (Cth) to carry on insurance business in Australia only for the purposes of discharging liabilities arising under policies issued by it prior to 1 July 2017.
Persons who are insured under insurance contracts to be assumed by QBE or who may otherwise be affected by the terms of the Scheme (Affected Policyholders) may request to attend and be heard by the Court on the application for confirmation of the Scheme. Due to the COVID-19 pandemic, the Court is modifying its practices in order to minimise in person attendance on Court premises. Accordingly, the Court will make arrangements for the hearing of this application for confirmation of the Scheme using remote access and file sharing technology. Any Affected Policyholder who wishes to attend and be heard at the hearing should notify the Court by contacting the Associate to Justice Lee by email (Associate.LeeJ@fedcourt.gov.au) of their intention to do so at least seven (7) days prior to the hearing date specified above. The Court will then make arrangements to allow Affected Policyholders to be heard and advise any such Affected Policyholders of those arrangements. Affected Policyholders do not need to take any action if they have no objection to the Scheme.
An Affected Policyholder has the right to attend the Federal Court and to request to be heard on the Scheme. This is an important protection for policyholders affected by a Scheme. It gives Affected Policyholders an opportunity to bring to the Court's attention any reasonable objections to the Scheme.
Affected Policyholders may inspect a copy of this notice, the Scheme, a summary of the Scheme and the actuarial reports of Warrick Gard of Ernst & Young dated 7 February 2020, Francois Rademeyer dated 6 May 2020 and Kaise Stephan dated 27 April 2020 (Actuarial Reports) upon which the Scheme is based (Scheme Documents) between 29 May 2020 and until a decision on the Scheme is made by the Court or the application is withdrawn, on the following websites maintained by:
- Realcover at www.realcover.com.au;
- QBE at www.qbe.com/au; and
- Real Estate Institute of New South Wales at www.reinsw.com.au.
An Affected Policyholder may obtain a copy of the Scheme Documents free of charge by contacting Genevieve Staff on +61 2 8227 8250, Monday to Friday between 8:30am and 5:30pm (other than public holidays), from 29 May 2020 to 22 June 2020, or by email at genevieve.staff@qbe.com.
You may also contact Genevieve Staff at the contact details referred to above if you have any other enquiries regarding the Scheme.
We recommend that each Affected Policyholder obtain and review the Scheme, the summary of the Scheme and the Actuarial Reports, which contain a discussion of the impact of the Scheme on the rights, security and expectations of policyholders.
THIS NOTICE HAS BEEN PREPARED BY QBE
Dated: 29 May 2020
Overview
The Insurance Act 1973, enacted by the Commonwealth Parliament, governs the insurance industry in Australia, aiming to protect policyholders and maintain the stability of the sector. This Act was introduced to address the need for a comprehensive regulatory framework that ensures the financial health of insurance companies and the security of policyholders' interests. In line with its policy objectives, the Act provides mechanisms for the transfer of insurance business, including the requirement for court confirmation of such transfers under Division 3A of Part III. This process ensures that any transfer of insurance business, such as the one proposed between Realcover Insurances Pty Limited and QBE Insurance (Australia) Limited, is done in a manner that is fair and does not adversely affect the policyholders involved.
Scope and Application
The notice pertains to an application by QBE Insurance (Australia) Limited, an entity authorised under the Insurance Act 1973 (Cth) to conduct insurance business in Australia, to the Federal Court of Australia for the confirmation of a scheme to transfer the insurance business of Realcover Insurances Pty Limited, another authorised insurer in Australia albeit with limited authority to discharge pre-1 July 2017 policies, to QBE. This scheme applies to any policyholders under contracts that will be transferred or otherwise affected by the terms of the scheme, referred to as Affected Policyholders. These individuals have the right to attend the Federal Court and request to be heard on the scheme, providing a safeguard for their interests. The Court has adapted its procedures due to the COVID-19 pandemic, facilitating remote access for hearings to ensure public health and safety. The application's geographic and jurisdictional reach is limited to the Commonwealth of Australia, specifically within the ambit of the Federal Court in Sydney. The scheme does not extend to other entities or businesses outside the scope of the insurance policies governed by the Insurance Act 1973 (Cth), and no specific exclusions, exemptions, or thresholds are mentioned in the notice. The confirmation of the scheme may be extended or restricted by subordinate instruments as per the provisions of the Insurance Act 1973 (Cth).
Key Provisions
The main operative sections of the Notice of Intention pertain to the impending application to the Federal Court of Australia (sections 1-2), the intention to transfer the insurance business of Realcover Insurances Pty Limited to QBE Insurance (Australia) Limited under Division 3A of Part III of the Insurance Act 1973 (section 3), and the opportunity for affected policyholders to attend and be heard by the Court on the application for confirmation of the Scheme (sections 4-6). The Notice provides a detailed explanation of the process and requirements for the scheme confirmation application, including the remote access arrangements due to the COVID-19 pandemic (sections 7-8). The Notice also directs affected policyholders to the locations where they can access the relevant documents and Actuarial Reports (sections 9-10).
The obligations and requirements imposed by the Notice on the parties involved primarily concern the notification and participation of affected policyholders. QBE Insurance (Australia) Limited and Realcover Insurances Pty Limited must ensure that affected policyholders are aware of the impending application and their rights to attend and be heard by the Court (sections 4-6). Affected policyholders have the right to inspect the Scheme, a summary of the Scheme, and the Actuarial Reports upon which the Scheme is based, as well as request to attend and be heard by the Court (sections 4-6). The Notice also imposes obligations on the parties to provide access to the relevant documents and Actuarial Reports, as well as a contact person for any further inquiries (sections 9-10).
The Notice does not explicitly state any offences, penalties, or civil/criminal consequences for breach of the provisions within the Notice itself. However, under Division 3A of Part III of the Insurance Act 1973, there are potential consequences for breaches of the relevant provisions, including fines and imprisonment. For instance, section 56A of the Insurance Act 1973 provides that a person who contravenes a direction given by the Court in relation to a Scheme may be guilty of an offence and liable to a fine of up to 50 penalty units (approximately AUD 5,500) for a corporation and up to 10 penalty units (approximately AUD 1,100) for an individual. Additionally, under section 56C of the Insurance Act 1973, a person who fails to comply with a requirement to provide information or documents to the Court in relation to a Scheme may be guilty of an offence and liable to a fine of up to 50 penalty units (approximately AUD 5,500) for a corporation and up to 10 penalty units (approximately AUD 1,100) for an individual. The maximum penalties are subject to change in accordance with the current penalty unit value.