Insurance Act 1973

If APRA considers that it would, under section 15, revoke a general insurer’s authorisation if the insurer had no liabilities in respect of insurance business carried on by it in Australia, APRA may direct the insurer to arrange, subject to APRA’s approval, to assign those liabilities to one or more other general insurers. The insurer must effect the assignment of the liabilities within the period specified in the direction and comply with such conditions relating to the assignment as are specified by APRA in the direction.

Subsection (1) has effect despite subsection 17B(1).

A general insurer who has asked APRA for a revocation under section 16 may, for the purpose of obtaining the revocation, make an application to the Federal Court under Division 3A for an order transferring the insurer’s insurance business to another general insurer.

A general insurer must not assign its liabilities under this section, and a purported assignment under this section is of no effect, unless the assignment is approved by APRA under subsection (4).

APRA may only approve a proposed assignment of a general insurer’s liabilities under this section if APRA is satisfied that the assignment is appropriate, having regard to:

the interests of the insurer’s policyholders; and

the interests of the policyholders of the general insurer or insurers to whom the liabilities are to be assigned; and

the national interest; and

any other matter APRA considers relevant.

Where a general insurer (the first general insurer) accepts an assignment of liabilities from another general insurer (the second general insurer) approved by APRA under subsection 17(4), the following are taken to have occurred:

policies in respect of which liability is accepted by the first general insurer (the transferring policies) are to be treated for all purposes as if each policy had been transferred by novation from the second general insurer to the first general insurer;

a policyholder of a transferring policy is taken to have the same rights against the first general insurer as the person would have against that insurer had the person’s policy been transferred by novation to the first general insurer;

the rights of the first general insurer against policyholders of transferring policies are the same as they would be had the transferring policies been transferred by novation to the first general insurer from the second general insurer.

If APRA approves an assignment, the general insurer must:

comply with the conditions on the approval; and

give reasonable notice (in writing) of the assignment to the insurer’s policyholders; and

give APRA such written evidence of the assignment as APRA reasonably requires.

An assignment of liabilities under this section may include the assignment of any rights or benefits in connection with contracts of insurance in respect of the insurance business carried on in Australia by the general insurer concerned.

A direction under subsection (1) has effect despite anything in the Insurance Acquisitions and Takeovers Act 1991.

A general insurer commits an offence if:

the insurer does, or fails to do, an act; and

by doing or failing to do the act, the insurer fails to comply with a direction under this section.

If an individual:

commits an offence against subsection (8) because of Part 2.4 of the Criminal Code; or

commits an offence under Part 2.4 of the Criminal Code in relation to an offence against subsection (8);

An offence against this section is an offence of strict liability.

For strict liability, see section 6.1 of the Criminal Code.

Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.

Part VI applies to the following decisions made under this section:

a decision to give a direction under subsection (1);

a refusal to approve a proposed assignment under subsection (4);

a decision to impose conditions on an approval.