Financial Sector Legislation Amendment (Simplifying Regulation and Review) Act 2007 (154 of 2007)

Schedule 1   Streamlining prudential regulation

Part 2   Amendments commencing 1 January 2008

Insurance Act 1973

179   At the end of Division 3 of Part IIIA

Add:

38AA Requirement to notify APRA of certain matters

Matters requiring immediate notice

(1) If:

(a) a general insurer has breached or will breach a provision of this Act or the prudential standards; and

(b) the provision relates to financial obligations the general insurer has to its policy holders or to the general insurer’s minimum capital requirements;

the general insurer must immediately notify APRA in writing of the breach.

Offence in relation to matters requiring immediate notice

(2) A general insurer commits an offence if the general insurer contravenes subsection (1).

Penalty: 200 penalty units.

Defence if matter already notified

(3) Subsection (2) does not apply to a general insurer in relation to a breach referred to in subsection (1) if:

(a) the general insurer becomes aware of the breach because it is informed of it by the auditor or actuary of the insurer; and

(b) the auditor or actuary informs the insurer that the auditor or actuary has notified APRA in writing of the matter; and

(c) the insurer has no reason to disbelieve the auditor or actuary.

Note 1: Auditors and actuaries must give APRA certain information under section 49A and may give APRA information under section 49B.

Note 2: The defendant bears an evidential burden in relation to the matters in subsection (3). See subsection 13.3(3) of the Criminal Code.

Matters requiring notice as soon as practicable

(4) If a body corporate that is a general insurer, an authorised NOHC or a subsidiary of a general insurer or authorised NOHC becomes aware:

(a) both:

(i) that the body corporate has breached or will breach a provision of this Act or the prudential standards (other than a provision to which subsection (1) applies); and

(ii) that the breach is or will be significant (see subsection (5)); or

(b) of a matter that materially and adversely affects the body corporate’s financial position;

the body corporate must give APRA a written report about the breach or matter as soon as practicable, and in any case no later than 10 business days, after becoming aware of the breach or matter.

(5) For the purposes of subparagraph (4)(a)(ii), a breach of a provision is or will be significant if the breach is or will be significant having regard to one or more of the following:

(a) the number or frequency of similar breaches;

(b) the impact the breach has or will have on the body corporate’s ability to conduct its business;

(c) the extent to which the breach indicates that the body corporate’s arrangements to ensure compliance with this Act or with the prudential standards might be inadequate;

(d) the actual or potential financial loss arising or that will arise from the breach:

(i) to policy holders of the body corporate; or

(ii) to the body corporate;

(e) any matters prescribed by the regulations for the purposes of this paragraph.

Offence in relation to matters requiring immediate notice

(6) A body corporate commits an offence if the body corporate contravenes subsection (5).

Penalty: 200 penalty units.

Defence if auditor or actuary notifies breach

(7) Subsection (6) does not apply to a body corporate in relation to a breach referred to in subsection (4) if:

(a) the auditor or actuary of the body corporate gives APRA a written report about the breach or matter; and

(b) the report is given before, or within 10 business days after, the body corporate becomes aware of the breach or matter.

Note 1: Auditors and actuaries must give APRA certain information under section 49A and may give APRA information under section 49B.

Note 2: The defendant bears an evidential burden in relation to the matters in subsection (7). See subsection 13.3(3) of the Criminal Code.

Ancillary offences

(8) If an individual:

(a) commits an offence under subsection (2) or (6) because of Part 2.4 of the Criminal Code; or

(b) commits an offence under Part 2.4 of the Criminal Code in relation to an offence under subsection (2) or (6);

the individual is punishable on conviction by a fine not exceeding 40 penalty units.

Limits on information to be provided

(9) A notice or report given under subsection (1) or (4) must not include information, books, accounts or documents with respect to the affairs of an individual insured person, unless the information, books, accounts or documents are in respect of prudential matters relating to the body corporate.