Revocation of authorisation to carry on insurance business
Insurance Act 1973
To: HSB Engineering Insurance Limited ABN 24 076 158 962 (‘the general insurer’)
Level 7, 68 Harrington Street, Sydney NSW 2000
Since:
(a) the general insurer was authorised on 17 February 1988 under section 12 of 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, Brandon Kong Leong Khoo, a delegate of APRA, under section 16(1) of the Act, revoke the general insurer’s authorisation.
The revocation takes effect on the date it is signed. Dated: 22 December 2020
[Signed]
Brandon Kong Leong Khoo1 Executive General Manager Insurance Division
Interpretation
Act means the Insurance Act 1973.
APRA means the Australian Prudential Regulation Authority.
insurance business has the meaning given in section 3(1) of the Act.
Note: A notice that revokes an authorisation must be published in the Gazette.
1 A delegate of APRA.
Overview
The Insurance Act 1973, enacted to regulate and ensure the orderly conduct of insurance business in Australia, was introduced to address the need for a robust regulatory framework to protect policyholders and maintain financial stability within the insurance sector. The Australian Prudential Regulation Authority (APRA) is responsible for the administration and enforcement of this Act. In the case of HSB Engineering Insurance Limited, the revocation of its authorisation to carry on insurance business under section 16(1) of the Act was executed following a formal request by the insurer and APRA’s determination that there were no outstanding liabilities and that the revocation would not be detrimental to the national interest. This legislative action underscores the policy objective of the Act to safeguard policyholder interests and maintain the integrity of the insurance market.
Scope and Application
The Insurance Act 1973 applies to entities authorised to carry on insurance business in Australia, specifically targeting those who have been granted an authorisation to operate under the provisions of the Act. In this case, the Act applies to HSB Engineering Insurance Limited, an entity authorised to conduct insurance business in Australia since 17 February 1988. The revocation of such authorisation pertains to the cessation of the entity's ability to carry on insurance business within the country. The Act's jurisdictional reach is national, given that it operates under the Commonwealth and applies across all states and territories of Australia. There are no specific exclusions or exemptions mentioned in this context, and the revocation is effective from the date it is signed by a delegate of APRA, Brandon Kong Leong Khoo. The authority to revoke authorisation is granted under section 16(1) of the Act, and the process mandates that a notice of revocation be published in the Gazette.
Key Provisions
The principal section of the legislation, section 16(1) of the Insurance Act 1973, provides the authority for the revocation of the authorisation to carry on insurance business. Under this provision, a delegate of the Australian Prudential Regulation Authority (APRA) can revoke the authorisation if certain conditions are met. The authorisation in question, held by HSB Engineering Insurance Limited, was granted under section 12 of the Act on 17 February 1988. The specific circumstances leading to the revocation include the insurer's request for the revocation and APRA's satisfaction that the insurer has no liabilities related to the insurance business and that revoking the authorisation does not contravene the national interest. The revocation is effective from the date it is signed, which in this case is 22 December 2020.
The obligations imposed by the Act on parties like HSB Engineering Insurance Limited include ensuring compliance with all regulatory requirements and maintaining the solvency and financial stability of their insurance operations. For APRA, the obligations involve assessing the insurer's liabilities and the potential impact of revocation on the national interest before granting or revoking authorisation. The Act mandates that APRA must satisfy itself that the insurer has no outstanding liabilities and that revocation would not be detrimental to the national interest. Furthermore, the Act requires APRA to publish a notice of revocation in the Gazette, as stipulated in the note accompanying the legislation.
In terms of consequences, the Act does not explicitly outline specific offences or penalties for the breach of its provisions. However, the revocation of an authorisation itself serves as a significant regulatory consequence. For HSB Engineering Insurance Limited, the revocation of its authorisation means it can no longer carry on insurance business in Australia. This cessation of operations could have substantial financial and operational repercussions for the insurer. APRA's role in ensuring the insurer has no liabilities before revoking the authorisation is crucial in protecting the interests of policyholders and the broader financial system. The notice of revocation published in the Gazette serves to inform the public and relevant stakeholders of the insurer's loss of authorisation, thereby maintaining transparency and accountability within the insurance sector.