Providing A Level Playing Field Through Legislation
The life insurance industry is a significantly large one involving many players, including the insurance policy holders, companies offering life insurance products among other stakeholders.
Each of the participants in the industry are doing their level best to maximize on the benefits they can gain from transacting business and this may give rise to a lot of unfair play, which may in turn harm the industry quite significantly.
That is why the Australian Government has the responsibility to take the initiative to provide regulations for the industry to become a more level playing field for all its stakeholders.
The Life Insurance Act Of 1995 (Amended)
Australia’s Life Insurance Act of 1995 (amended) outlines its main aim as protecting the interests of those who purchase life insurance as well as those planning to purchase such products in a manner that is coherent with the “continued development of a viable, competitive and innovative life insurance industry”. Another aim for this Act is to protect the interests of those who are entitled to the benefits resulting from life insurance.
Some of the ways in which the Life Insurance Act regulates the industry involve limiting the conduct of life insurance providers to only those capable of meeting the stipulated requirements, imposing requirements that are aimed at promoting prudence in management, provisions for supervisory bodies, ensuring that the interests of policy holders are protected adequately in the instance of a life company winding up, provision of judicial management, as well as providing supervision in the event of a transfer or amalgamation.
Definitions And General Requirements For Life Insurance Businesses
The Life Insurance Act clearly defines what a life insurance business is, and outlines the classes of life insurance businesses. The Act also outlines the general requirements for the establishment of a life insurance company’s statutory fund, and goes on to stipulate the duties and liabilities of the life insurance company directors. Friendly societies have also been catered for under this Act. The allocation of the company’s profits, losses and capital payments as well as the portioning of the shareholder’s capital and profits retained is governed under this Act.
Financial Management, Monitoring And Investigation
The Life Insurance Act also stipulates that financial records be kept in accordance with the regulations of the Act for life insurance businesses, whether with Australian or overseas funds. It is also clear in the Act that there are specified regulators who monitor the affairs of life insurance businesses. According to the Act, the Australian Prudential Regulation Authority (APRA) has been given the mandate to supervise, and if need be, investigate the conduct of life insurance companies and friendly societies. Life insurance companies are obligated to submit any information that the Authority may ask of them in accordance with the conditions of the Act.
Judicial Management, External Administration And Company Wind Up
The Act specifies instances in which APRA may apply in a court of law in case a life insurance company is put under judicial management. Instances which may prompt the external administration or winding up of a life insurance company as well as procedures on the same are clearly defined out in the Act. Read: How To Cancel The Mortgage
Issuance Of Policies, Transfers and Amalgamations
The Act appropriately advises on the capacity of persons eligible for taking up life insurance, provisions for adjustments made to policy forms, as well as the legal requirements and procedures for conducting a transfer or visit us for more information.