Revocation of authorisation to carry on insurance business 2022 – Arch LMI Pty Ltd
Insurance Act 1973
To: Arch LMI Pty Ltd ABN 60 601 356 174 (‘the general insurer’) Since:
(a) the general insurer was authorised under section 12 of the Insurance Act 1973 (‘the Act’) to carry on insurance business in Australia (‘the authorisation’);
(b) the general insurer has asked APRA to revoke the authorisation; and
(c) APRA is satisfied the general insurer has no liabilities in respect of insurance business carried on by it in Australia and revoking the authorisation would not be contrary to the national interest,
I Sean Carmody, a delegate of APRA, under subsection 16(1) of the Act, revoke the general insurer’s authorisation.
The revocation takes effect on the date it is made. Dated: 16 December 2022
Sean Carmody Executive Director Insurance Division
Interpretation
In this instrument:
APRA means the Australian Prudential Regulation Authority.
insurance business has the meaning given in subsection 3(1) of the Act.
Page 1 of 1
Overview
The Revocation of Authorisation to Carry on Insurance Business 2022 is a legislative instrument issued under the Insurance Act 1973, which was enacted to regulate insurance businesses in Australia. The Act was introduced to address the need for a regulatory framework to protect policyholders and ensure the financial stability of the insurance industry. The revocation of Arch LMI Pty Ltd's authorisation to carry on insurance business in Australia was carried out by Sean Carmody, a delegate of the Australian Prudential Regulation Authority (APRA). This revocation was prompted by a request from the general insurer, and APRA's satisfaction that the insurer has no outstanding liabilities and that the revocation would not be contrary to the national interest.
The revocation took effect on the date of its issuance, 16 December 2022. This legislative instrument demonstrates the Australian government's commitment to maintaining a stable and secure insurance industry while also responding to the needs and requests of the authorised insurers. The policy objective behind this revocation is to ensure the continued protection of policyholders and the financial integrity of the insurance sector in Australia.
Scope and Application
The Insurance Act 1973 applies to general insurers authorised to carry on insurance business in Australia, including Arch LMI Pty Ltd, which is the subject of this revocation. The Act provides the framework for the authorisation and regulation of insurance businesses, and the revocation of such authorisation is one of its key provisions. The Act applies to entities like Arch LMI Pty Ltd, which is a general insurer with a specified Australian Business Number (ABN), and its authorisation to conduct insurance business is subject to the conditions and requirements of the Act. The jurisdictional reach of the Act is national, governing insurance businesses across Australia. While the Act provides for the revocation of authorisations, it also includes mechanisms for exemptions and thresholds that must be considered before revocation. The Act’s provisions can be extended or further specified through subordinate instruments, allowing for detailed regulatory measures and conditions.
Key Provisions
The primary operative section of the revocation of authorisation is section 16(1) of the Insurance Act 1973, which allows a delegate of the Australian Prudential Regulation Authority (APRA) to revoke an insurance authorisation if certain conditions are met. Specifically, the authorisation can be revoked if the insurer requests it and APRA is satisfied that the insurer has no liabilities related to the insurance business and that revoking the authorisation does not contravene the national interest. In this case, Sean Carmody, as a delegate of APRA, has exercised this power to revoke the authorisation of Arch LMI Pty Ltd (the general insurer), which took effect on the date of the revocation, 16 December 2022.
The Act imposes specific obligations and requirements on the parties it governs. Firstly, the general insurer must have an existing authorisation to carry on insurance business in Australia, as per section 12 of the Act. Secondly, the insurer must formally request the revocation of this authorisation. Thirdly, APRA must satisfy itself that the insurer has no liabilities in respect of insurance business carried on in Australia and that revoking the authorisation would not be contrary to the national interest. This thorough assessment process ensures that the revocation is justified and in the public interest.
Failure to comply with the requirements or obligations set out in the Act may result in civil or criminal consequences. However, the specific Act does not outline any explicit offences, penalties, or consequences for non-compliance in the revocation process itself. The primary consequence of the revocation is the loss of authorisation, which means the general insurer can no longer carry on insurance business in Australia. The absence of stated penalties in this particular revocation instrument suggests that the primary focus is on ensuring the orderly and lawful cessation of the insurer’s operations, rather than penalising the insurer for the revocation.