Module Application
- Does your organisation seek to obtain approval to carry on a life insurance business in Australia?
- Does your organisation issue life insurance products in Australia?
In order for a life company to operate a life insurance business in Australia, it must comply with all obligations set out in the Life Insurance Act 1995 (Cth) and related regulations, as well as applicable prudential standards. Both the Australian Prudential Regulatory Authority (APRA) and the Australian Securities and Investments Commission (ASIC) are involved in regulating the industry.
A life company must be granted approval by APRA to carry on a life insurance business in Australia and must ensure that it complies with all general ongoing prudential requirements and obligations. The obligations covered in the module include:
- Registration of a Life Company
- Establishing and operating a statutory fund or benefit fund
- Governance and establishment of a board
- Management and responsibility for adequate capital
- Prudential remuneration requirements
- Re-insurance management
- Reporting requirements
- Management of policies (including registration, transfer, assignment and surrender)
- Responding to APRA monitoring and investigation requests (this includes providing APRA and ASIC with access to its documents, employees and premises and responding to any APRA investigation or request.
- Timeframe requirements.
The module also covers the requirements of the insurer to establish, maintain, update and review policies and procedures to ensure that it complies with additional obligations, including:
- Ensuring that appropriate auditors are appointed, instructed and assisted in the performance of their duties
- The appointment of an actuary to assist with financial modelling and the management of financial risk
- Employing fit and proper personnel
- Ensuring that all staff are properly trained to understand their obligations and the obligations of the organisation
- Developing a business continuity plan
- Complying with outsourcing requirements
- Consulting with APRA before entering into offshoring arrangements
- Complying with all APRA reporting standards and provide all required information about issued policies to APRA
The Life Insurance Code of Practice administered by the Council of Australian Life Insurers (CALI) is also covered in this module. This code applies to all CALI members who are registered under the life insurance legislation to issue life insurance policies in Australia and includes life companies and friendly societies.
The module covers consequences both civil and criminal that may apply to a general insurer that fails to comply with its obligations. The actual consequence will depend on the specific obligation that is breached but can include:
- Imprisonment
- Financial penalties
- Appointment of a judicial manager to administer the organisation
- Revocation of the organisation’s authorisation to operate an insurance business
- Application for an injunction to restrain dealings within the organisation
- Accepting enforceable undertakings
- Making a declaration that compensation is payable for loss or damage.
The Life Insurance module does not cover the rights or entitlements of individuals who have suffered damages or losses due to breaches of obligations by Australian insurance and financial services entities. The module does not cover the process that an entity or an individual would follow to report or seek compensation for the breach or their loss.
The Life Insurance module provides the obligations specifically relating to applying for and maintaining the authority to carry on business as a life company and issue life insurance policies in Australia. It does not include the obligations related to obtaining and maintaining an Australian Financial Services licence which, while required by a life insurer, is the subject of the Australian Financial Services licence module.