Revocation of authorisation to carry on insurance business 2022 – FM Insurance Company Limited
Insurance Act 1973
To: FM Insurance Company Limited ARBN 007 502 829 (‘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: 28 June 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.
Overview
The Insurance Act 1973, enacted to regulate and oversee the insurance industry in Australia, has facilitated the revocation of authorisation for FM Insurance Company Limited, ARBN 007 502 829, to conduct insurance business within the country. The revocation, effective from 28 June 2022, was initiated by a request from FM Insurance Company Limited and was executed by Sean Carmody, a delegate of the Australian Prudential Regulation Authority (APRA). APRA, satisfied that the general insurer has no liabilities and that revocation would not be contrary to the national interest, exercised its authority under subsection 16(1) of the Act. The policy objective underpinning this action is to ensure that insurance companies operating in Australia maintain adequate standards of financial responsibility and integrity, thereby protecting policyholders and maintaining the stability of the insurance market.
This legislative instrument, numbered C2022G00523 and gazetted on 28 June 2022, serves to formalise the process of revoking the authorisation of FM Insurance Company Limited, thereby removing it from the list of authorised insurers. The revocation follows the insurer's request and APRA's assessment, ensuring compliance with the requirements set forth by the Insurance Act 1973. This action is taken in the public interest, reflecting the commitment of the Australian government and regulatory bodies to uphold the standards of the insurance industry and safeguard the interests of consumers.
Scope and Application
The Revocation of Authorisation to Carry on Insurance Business 2022, which pertains to FM Insurance Company Limited, is a specific application of the Insurance Act 1973. This legislation applies to FM Insurance Company Limited, identified by its Australian Business Registration Number (ARBN) 007 502 829, which was previously authorised under section 12 of the Act to conduct insurance business within Australia. The revocation of the authorisation signifies a cessation of the company's legal capacity to operate as an insurance entity in the country, effective from the date of the revocation instrument. This action is taken under the authority of Sean Carmody, a delegate of the Australian Prudential Regulation Authority (APRA), following the insurer's request and APRA's determination that the company has no outstanding liabilities related to its insurance activities in Australia and that revoking the authorisation does not conflict with the national interest. The scope of the Act, in this instance, is limited to the specific revocation of the authorisation for the general insurer in question, without broader implications for other entities or industries unless specified by additional legislation or regulations.
Key Provisions
The primary sections relevant to the revocation of authorisation for FM Insurance Company Limited are section 12, which details the authorisation process, and section 16, which outlines the revocation process. Under section 12, FM Insurance Company Limited was granted permission to conduct insurance business in Australia. Section 16 allows for the revocation of this authorisation under certain conditions, such as the insurer requesting the revocation and the Australian Prudential Regulation Authority (APRA) being satisfied that there are no outstanding liabilities and that revocation is not contrary to the national interest.
FM Insurance Company Limited, as the general insurer, is subject to several obligations under the Insurance Act 1973. Firstly, it must operate within the scope of its authorisation, ensuring all insurance activities comply with legislative requirements. Additionally, it must maintain sufficient financial resources to meet its obligations to policyholders. The company is also required to report regularly to APRA on its financial status and any material changes in its business operations. Lastly, it must cease all insurance business activities in Australia immediately upon revocation of its authorisation, as per section 16.
In the event of non-compliance with the provisions of the Insurance Act 1973, FM Insurance Company Limited may face significant legal consequences. If the company continues to conduct insurance business after its authorisation has been revoked, it could be charged under section 16(2) of the Act, which may result in criminal penalties. The maximum penalty for such an offence is a substantial fine, as specified in the relevant legislation. Additionally, any outstanding liabilities to policyholders or creditors may be pursued through civil litigation, potentially leading to further financial and reputational damage. It is crucial that FM Insurance Company Limited adheres strictly to the requirements set forth in the Act to avoid these severe repercussions.