Terrorism and Cyclone Insurance (Payments) Direction 2024
I, Stephen Jones, Assistant Treasurer and Minister for Financial Services, give the following direction to the Australian Reinsurance Pool Corporation.
Dated 21 March 2024
Stephen Jones
Assistant Treasurer
Minister for Financial Services
Contents
Part 1—Preliminary
1 Name
2 Commencement
3 Authority
4 Definitions
Part 2—Direction to make payments
5 Payments to the Commonwealth
Part 1—Preliminary
1 Name
This instrument is the Terrorism and Cyclone Insurance (Payments) Direction 2024.
2 Commencement
(1) Each provision of this instrument specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.
Commencement information |
Column 1 | Column 2 | Column 3 |
Provisions | Commencement | Date/Details |
1. The whole of this instrument | The day after this instrument is registered. | |
Note: This table relates only to the provisions of this instrument as originally made. It will not be amended to deal with any later amendments of this instrument.
(2) Any information in column 3 of the table is not part of this instrument. Information may be inserted in this column, or information in it may be edited, in any published version of this instrument.
3 Authority
This instrument is made under the Terrorism and Cyclone Insurance Act 2003.
4 Definitions
Note: Expressions have the same meaning in this instrument as in the Terrorism and Cyclone Insurance Act 2003 as in force from time to time—see paragraph 13(1)(b) of the Legislation Act 2003.
In this instrument:
the Act means the Terrorism and Cyclone Insurance Act 2003.
Part 2—Direction to make payments
5 Payments to the Commonwealth
(1) Under section 38 of the Act, the Corporation is directed to make each of the following payments to the Commonwealth:
(a) $55 million, as a guarantee fee;
(b) $35 million, as a capital holding fee.
(2) The payments are to be made to the Commonwealth on or before 31 March 2024 by electronic transfer to:
Account name—Department of the Treasury Official Administered Receipts Account
BSB—092-009
Account Number—918 379
Overview
The Terrorism and Cyclone Insurance (Payments) Direction 2024 was issued under the authority of the Terrorism and Cyclone Insurance Act 2003, by Stephen Jones, Assistant Treasurer and Minister for Financial Services. This direction was enacted to address the financial implications arising from the insurance guarantee schemes that were established to provide cover for terrorism and cyclone-related damages. The Terrorism and Cyclone Insurance Act 2003 was enacted to ensure that insurance coverage remains available for terrorism and cyclone risks, thereby protecting policyholders and maintaining the stability of the insurance market. The policy objective of the Direction is to ensure that the Australian Reinsurance Pool Corporation makes specific payments to the Commonwealth, which include a guarantee fee and a capital holding fee, to support these insurance schemes. The payments are mandated to be made by electronic transfer to a designated Department of the Treasury account by 31 March 2024.
Scope and Application
The Terrorism and Cyclone Insurance (Payments) Direction 2024, issued by Stephen Jones, Assistant Treasurer and Minister for Financial Services, pertains to the Australian Reinsurance Pool Corporation and its obligations under the Terrorism and Cyclone Insurance Act 2003. This direction mandates specific payments to the Commonwealth, namely a guarantee fee of $55 million and a capital holding fee of $35 million, to be completed by electronic transfer to the Department of the Treasury’s Official Administered Receipts Account by 31 March 2024. The instrument's provisions commence the day after its registration, and it is designed to enforce certain financial obligations related to terrorism and cyclone insurance. The geographic and jurisdictional reach of this direction is within the Commonwealth of Australia, impacting the financial operations of the Australian Reinsurance Pool Corporation and ultimately affecting entities within the insurance sector that fall under the purview of the Act.
Key Provisions
The Terrorism and Cyclone Insurance (Payments) Direction 2024I, made under the Terrorism and Cyclone Insurance Act 2003, mandates specific payments from the Australian Reinsurance Pool Corporation to the Commonwealth. Section 5(1) specifies that the Corporation must make two payments: $55 million as a guarantee fee and $35 million as a capital holding fee. These payments are required under section 38 of the Act and must be completed by electronic transfer to the Department of the Treasury Official Administered Receipts Account by 31 March 2024. The account details provided are: Account name—Department of the Treasury Official Administered Receipts Account, BSB—092-009, and Account Number—918 379.
The Direction imposes clear obligations on the Australian Reinsurance Pool Corporation. Primarily, it requires the Corporation to ensure that the specified payments are made to the Commonwealth by the stipulated date and through the prescribed method. The Corporation must transfer the funds electronically to the designated account to comply with the Direction. Additionally, the Direction mandates that the Corporation adheres to the definitions and interpretations provided in the Terrorism and Cyclone Insurance Act 2003, ensuring consistency in understanding terms and requirements.
While the Direction itself does not explicitly outline offences or penalties for non-compliance, breaches of the Terrorism and Cyclone Insurance Act 2003 may incur legal consequences. Under section 45 of the Act, penalties for non-compliance can include fines and potential legal action. The maximum penalties for contraventions of the Act can vary, but they may include substantial financial penalties. These consequences underscore the importance of adhering to the Direction’s requirements to avoid legal repercussions and financial liabilities.