Overview

The Revocation of Authorisation to Carry on Insurance Business 2026 – Eric Insurance Limited was enacted to address the need for the Australian Prudential Regulation Authority (APRA) to revoke the authorisation of Eric Insurance Limited, a general insurer, to carry on insurance business in Australia. This revocation follows the insurer's appointment of a Voluntary Administrator, McGrathNicol, on 28 July 2025, and the subsequent execution of a Deed of Company Arrangement on 19 September 2025, which extinguished the insurer's remaining liabilities. APRA, satisfied that the revocation would not be contrary to the national interest, exercised its power under subsection 16(1) of the Insurance Act 1973 to revoke the authorisation, a decision formally communicated by Peter Kohlhagen, a delegate of APRA, on 20 May 2026. This legislative instrument ensures the orderly winding up of the insurer's business while protecting policyholders and maintaining the stability of the insurance market.

Scope and Application

The Insurance Act 1973 governs the authorisation and operation of insurance businesses in Australia, and the revocation of such authorisations when deemed necessary. This Act applies to all entities authorised to carry on insurance business in Australia, including general insurers like Eric Insurance Limited. The revocation process outlined in the Act allows for the cancellation of an insurer's authorisation when certain conditions are met, such as the appointment of a Voluntary Administrator and the execution of a Deed of Company Arrangement, which effectively extinguishes the insurer's liabilities. In this specific case, Eric Insurance Limited's authorisation to carry on insurance business in Australia has been revoked by a delegate of the Australian Prudential Regulation Authority (APRA) due to the insurer's lack of remaining liabilities and the national interest being safeguarded. The revocation is effective from the date it is made, highlighting the legislative framework's role in ensuring the stability and integrity of the insurance sector.

Key Provisions

Section 12 of the Insurance Act 1973 authorised Eric Insurance Limited to carry on insurance business in Australia. However, the authorisation has now been revoked by a delegate of the Australian Prudential Regulation Authority (APRA) under subsection 16(1) of the Act. The revocation of the authorisation occurs due to the entry into a Deed of Company Arrangement (DOCA) on 19 September 2025, which extinguished the general insurer's remaining liabilities in respect of its insurance business. McGrathNicol, the Voluntary Administrator appointed by the general insurer, requested the revocation, and APRA is satisfied that the revocation would not be contrary to the national interest. The Insurance Act 1973 imposes several obligations on parties authorised to carry on insurance business in Australia. These obligations include maintaining adequate capital and solvency requirements, providing fair and transparent disclosure to policyholders, and complying with regulatory standards set by APRA. The general insurer, Eric Insurance Limited, was required to meet these obligations as part of its authorisation. The Act also mandates that authorised insurers conduct their business in a manner that protects the interests of policyholders and the broader financial system. The revocation of the authorisation under section 16(1) of the Act results in the termination of Eric Insurance Limited's ability to carry on insurance business in Australia. This means that the company can no longer underwrite new policies, service existing policies, or engage in any activities related to its insurance business. The revocation also imposes additional obligations on the company, such as notifying policyholders of the revocation and arranging for the transfer of existing policies to other insurers. Under the Insurance Act 1973, there are both civil and criminal consequences for breaches of the Act's provisions. Civil penalties can include fines up to $504,000 for individuals and $2,520,000 for bodies corporate, as stipulated in section 25 of the Act. Criminal offences can result in fines and imprisonment, with the maximum penalties varying depending on the specific offence. For example, fraudulent conduct in the carrying on of insurance business can attract fines of up to $252,000 for individuals and $1,260,000 for bodies corporate, as well as imprisonment for up to five years. The Act also provides for the possibility of disqualification orders against persons who have been found guilty of certain offences, preventing them from participating in the management of insurance companies in the future.