Explanatory Memorandum
(Circulated by authority of the Treasurer, the Honourable Peter Costello MP)13 Schedule 9: Amendment of the Insurance Act 1973
The purpose of Schedule 9 is to amend the Insurance Act 1973 (the Act) to transfer regulatory responsibility for the Act to APRA except for one provision which is to be transferred to ASIC. The Act regulates the general insurance industry, including Lloyds underwriters. All of the functions and powers under the Act were formerly performed and exercised by the ISC. Schedule 9 incorporates amendments to the Act that are proposed in the Insurance Laws Amendment Act 1998.
Commencement
13.1 Schedule 9 will commence on the commencement of the proposed Australian Prudential Regulation Authority Act 1998.
13.2 It is anticipated that the Insurance Laws Amendment Bill 1998, once enacted, will commence by or on 1 July 1998. Schedule 9 amends provisions in the proposed Insurance Laws Amendment Act. In the event that the proposed Insurance Laws Amendment Act 1998 commences before the Financial Sector Reform (Amendments and Transitional Provisions) Act 1998 (the FSR Act), Schedule 9 will commence on the commencement of the proposed Australian Prudential Regulation Authority Act 1998. In the event that the proposed Insurance Laws Amendment Act and the proposed FSR Act commence on the same day, the provisions of Schedule 9 commence immediately after the provisions of the proposed Insurance Laws Amendment Act.
Change of name of regulator
13.3 Until the commencement of the Financial Sector Reform (Amendments and Transitional Provisions) Act 1998 (the FSR Act), the Insurance and Superannuation Commissioner is responsible for the supervision of all aspects of compliance with the Act. On commencement of the FSR Act, the Insurance and Superannuation Commissioner Act 1987 will be repealed and the office of the Insurance and Superannuation Commissioner will no longer exist. Items 1 and 2 insert definitions of 'APRA' and 'ASIC' into section 3 of the Act, and item 4 repeals the definition of Commissioner, which will no longer be required under the Act.
13.4 Schedule 9 therefore amends references in the Act to the Insurance and Superannuation Commissioner by replacing them with references to APRA, except in one instance where it is replaced by a reference to ASIC.
13.5 ASIC is to have general responsibility for the administration of section 113 which relates to approval of and compliance with codes of practice relating to general insurance (Items 6 and 86). It therefore fits into ASIC's role in relation to consumer protection. ASIC is also given certain ancillary powers (Item 87).
13.6 Since APRA is not a natural person, references in the Act to 'he or she' or 'him or her' are replaced with 'APRA', 'his or her' by 'APRA's' and 'himself or herself' with "itself'. Further, because only a natural person can enter premises, section 54 is amended to replace 'Commissioner' with 'an authorised person'. An authorised person is defined in proposed subsection 54(3) as an APRA staff member.
Repeal of provisions
13.7 Some of the provisions in the Act deal with general administrative matters which are more appropriately dealt with in the specific APRA Act. For example, the proposed APRA Act includes comprehensive provisions dealing with the delegation of powers by APRA. For this reason it is no longer necessary to include in the Act a separate power to delegate functions. Therefore, the delegation power in section 59 refers to the APRA Act's delegation powers.
13.8 Similarly, APRA's annual reporting requirements are dealt with in the APRA Act, and it is therefore no longer necessary to retain s125 of the Act.
13.9 The secrecy provisions in s126 and s127 of the Act dealt with the manner in which the ISC was required to treat information gathered by it under the Act in the course of conducting its functions. This provision is broadly consistent with the secrecy provisions administered by the ISC under other legislation for which it had responsibility, e.g. the Superannuation Industry (Supervision) Act 1993 and the Life Insurance Act 1995. Therefore, the secrecy provisions included in the APRA Act mean that it is no longer necessary to retain individual provisions in each Act. Requirements peculiar to any Act can be addressed through the power in the APRA Act that allows disclosure of otherwise protected information with the approval of the Board of APRA.
13.10 The Schedule also deletes Part IX of the Act, which set transitional provisions that applied on commencement of the Act, but are now unnecessary. The provisions will, however, continue to apply for any company to whom Part IX applied before the commencement of these amendments.
13.11 The Items that repeal superfluous provisions in the Act are: IA926 and IA17.