Insurance Act 1973

APRA may give a general insurer a direction (a recapitalisation direction) that requires the insurer to increase the insurer’s level of capital to the level specified in the direction if:

the insurer informs APRA that:

the insurer considers that the insurer is likely to become unable to meet the insurer’s obligations; or

the insurer is about to suspend payment; or

APRA considers that, in the absence of external support:

the insurer may become unable to meet the insurer’s obligations; or

the insurer may suspend payment; or

it is likely that the insurer will be unable to carry on insurance business in Australia consistently with the interests of the insurer’s policyholders; or

it is likely that the insurer will be unable to carry on insurance business in Australia consistently with the stability of the financial system in Australia; or

the insurer:

becomes unable to meet the insurer’s obligations; or

suspends payment.

Subsection (1B) applies if subsections 103A(3) and (4) apply to a NOHC/NOHC subsidiary because of a primary recapitalisation direction given to a general insurer (as mentioned in subsection 103A(2)).

For the purposes of facilitating compliance with the primary recapitalisation direction, APRA may give the NOHC/NOHC subsidiary a direction (also a recapitalisation direction) that requires the NOHC/NOHC subsidiary to do anything that is specified in the direction.

In deciding whether to give a recapitalisation direction, APRA must consult with the Australian Competition and Consumer Commission (the ACCC), unless the ACCC notifies APRA, in writing, that the ACCC does not wish to be consulted about:

the direction; or

a class of directions that includes the direction.

The regulations may specify that a particular form of support is not external support for the purposes of paragraph (1)(b).

A recapitalisation direction is not a legislative instrument.

A recapitalisation direction may deal with the time by which, or period during which, it is to be complied with.

APRA may, by notice in writing to the general insurer, vary the recapitalisation direction if, at the time of the variation, it considers that the variation is necessary and appropriate.

The direction has effect until APRA revokes it by notice in writing to the general insurer. APRA may revoke the direction if, at the time of revocation, it considers that the direction is no longer necessary or appropriate.