Senate

Explanatory Memorandum

(Circulated by authority of the Treasurer,the Hon Ralph Willis, MP)

LIFE INSURANCE (CONSEQUENTIAL AMENDMENTS AND REPEALS) BILL 1994

GENERAL OUTLINE AND MAIN PURPOSE OF THE BILL

This Bill, provides for a number of amendments to legislation following from the introduction of the companion Life Insurance Bill 1994, which establishes a new modern regulatory regime for the life insurance industry. This new regime will substantially strengthen prudential supervision and improve consumer protection.

The Bill provides for the repeal of the Life Insurance Act 1945, the Life Insurance Policy Holders' Protection Levies Act 1991 and the Life Insurance Policy Holders' Protection Levies Collection Act 1991. The Life Insurance Act 1945 is to be replaced by the Life Insurance Act 1994. The Life Insurance Policy Holders' Protection Levies Act 1991 and the Life Insurance Policy Holders' Protection Levies Collection Act 1991 were originally put in place to provide for the imposition of levies on life insurance companies to raise revenue to provide a measure of financial protection to the policy holders of the Occidental and Regal life insurance companies. The judicial manager for Occidental and Regal has advised that it is not necessary to call on these levies. It is therefore appropriate that the Acts now be repealed.

This Bill also amends the Defence Force Retirement and Death Benefits Act 1973, the Defence Forces Retirement Benefits Act 1948, the Financial Corporations Act 1974, the Income Tax Assessment Act 1936, the Insurance Acquisitions and Takeovers Act 1991, the Insurance Act 1973, the Insurance (Agents and Brokers) Act 1984, the Insurance and Superannuation Commissioner Act 1987, the Insurance Contracts Act 1984, the Insurance Supervisory Levies Collection Act 1989, the Life Insurance Supervisory Levy Act 1989, the Parliamentary Contributory Superannuation Act 1948, the Pooled Development Funds Act 1992, the Social Security Act 1991, the Superannuation Act 1922, the Superannuation Act 1976, the Superannuation Industry (Supervision) Act 1993 and the Corporations Law as a consequence of the commencement of the Life Insurance Bill 1994.

The provisions of the Bill generally replace references in the Principal Acts to the Life Insurance Act 1945 with references to the Life Insurance Act 1994.

FINANCIAL IMPACT STATEMENT

The measures contained in this Bill are consequential upon the commencement of the Life Insurance Bill 1994 and will not directly incur any costs.

EXPLANATORY NOTES ON THE LIFE INSURANCE (CONSEQUENTIAL AMENDMENTS AND REPEALS) BILL 1994

PART 1 - PRELIMINARY

CLAUSE 1 SHORT TITLE

1. This clause provides the mode of citation of the Bill.

CLAUSE 2 COMMENCEMENT

2. This clause provides for the Bill to come into operation immediately on the commencement of the Life Insurance Act 1994.

CLAUSE 3 APPLICATION

3. This clause provides that amendments to the Defence Force Retirement and Death Benefits Act 1973, the Defence Forces Retirement Benefits Act 1948, the Parliamentary Contributory Superannuation Act 1948 and the Superannuation Act 1976 only apply to a transfer value that has become payable to, or in respect of, a person on or after the commencement of this Act.

4. Subclause (2) provides that amendments to the Income Tax Assessment Act 1936 only apply to the 1994-95 year of income and the subsequent years of income.

PART 2 - CONSEQUENTIAL AMENDMENTS

CLAUSE 4 CONSEQUENTIAL AMENDMENTS

5. This clause provides that:

•

subclause (1) - amendments to a number of Acts are set out in Part 1 of the Schedule to the Act; and

•

subclause (2) - amendments to the Corporations Law are set out in Part 2 of the Schedule to the Act.

PART 3 - REPEAL OF ACTS

CLAUSE 5 REPEAL OF ACTS

6. This clause provides for the repeal of the Life Insurance Act 1945, the Life Insurance Policy Holders' Protection Levies Act 1991 and the Life Insurance Policy Holders' Protection Levies Collection Act 1991.