Part 7.1 Licensing of insurers

157   Offence—unlicensed insurers

(cf s 100 MAA)

(1)  A person must not issue or purport to issue a certificate of insurance under section 11 unless the person is a licensed insurer.

Maximum penalty: 100 penalty units.

(2)  If a person contravenes this section, or any condition to which a licence under this Part is subject, the certificate remains a valid certificate of insurance and the contravention does not annul or affect the third-party policy that is taken by this Act to have been issued on the issue of the certificate.

158   Applications for licences

(cf s 101 MAA)

(1)  An application for a licence under this Part may be made to the Authority by any corporation authorised under the Insurance Act 1973 of the Commonwealth to carry on insurance business.

(2)  A corporation is not competent to make an application unless it is a party to the Insurance Industry Deed.

(3)  An application is to be in such form and accompanied by such documents:

(a)  as may be prescribed by the regulations, and

(b)  subject to any such regulations, as may be determined by the Authority.

(4)  Without affecting the generality of subsection (3), an applicant for a licence may be required to furnish the following particulars and documents:

(a)  particulars of the shareholders, directors and other managers of the applicant,

(b)  previous returns and accounts under the Corporations Law, the Corporations Act 2001 of the Commonwealth and the Insurance Act 1973 of the Commonwealth,

(c)  particulars of re-insurance arrangements to which the applicant is a party,

(d)  a draft business plan under section 173.

(5)  A person who, in or in connection with an application for a licence, makes a statement knowing that it is false or misleading in a material particular is guilty of an offence.

Maximum penalty: 50 penalty units or imprisonment for 12 months, or both.

159   Determination of application for licence

(cf s 102 MAA)

(1)  The Authority is to consider each application for a licence under this Part and may:

(a)  grant a licence to the applicant, or

(b)  refuse the application.

(2)  The Authority may, in determining an application for a licence, take into consideration:

(a)  the suitability of the applicant, and

(b)  the paid-up share capital and reserves of the applicant, and

(c)  the constitution of the applicant (if any), and

(d)  the re-insurance arrangements of the applicant, and

(e)  the efficiency of the motor accidents scheme under this Act generally, and

(f)  such other matters as the Authority thinks fit.

(3)  Despite subsection (1), the Authority must refuse an application for a licence from a corporation that does not comply with such requirements as are prescribed by the regulations for the purposes of this section.

(4)  A licence must not be granted under this Part unless the applicant has paid (or has made arrangements acceptable to the Authority for the payment of) the fee determined by the Authority, with the approval of the Minister, for the grant of the licence.

(5)  When the Authority proposes to grant a licence to a corporation, it must give 14 days’ notice of the proposal to all licensed insurers specifying the name of the corporation.

160   Duration of licences

(cf s 104 MAA)

A licence granted under this Part continues in force until it is cancelled under this Part.

161   Conditions of licences

(cf s 105 MAA)

(1)  A licence granted under this Part is subject to:

(a)  such conditions as may be prescribed by this Act or the regulations, and

(b)  such conditions (not inconsistent with this Act or the regulations) as may be imposed by the Authority:

(i)  on the granting of the licence, or

(ii)  at any time during the currency of the licence.

(2)  The Authority may, by notice served on a licensed insurer, impose conditions (or further conditions) to which the licence is to be subject or revoke or vary any condition imposed on the licence by the Authority.

(3)  A condition to which a licence is subject has effect whether or not it is endorsed on the licence.

(4)  A licensed insurer who contravenes, whether by act or omission, any condition to which the licence is subject is guilty of an offence.

Maximum penalty: 100 penalty units.

(5)  An insurer (not being a licensed insurer) who contravenes, whether by act or omission, any obligation imposed by this Act on the insurer in connection with a motor accident, being an obligation that is declared by this Act to be a condition of a licence under this Part, is guilty of an offence.

Maximum penalty: 100 penalty units.

(6)  A licensed insurer cannot be convicted of an offence under subsection (4) and required to pay civil penalty under section 166 in respect of the same act or omission.

162   Matters that may be regulated by conditions of licences

(cf ss 105 (5) and 106 MAA)

(1)  Without limiting the generality of section 161, the conditions to which a licence under this Part may be subject include conditions:

(a)  for the purpose of ensuring compliance with the obligations of the licensed insurer, or

(b)  for the purpose of ensuring that insurance premiums for third-party policies are available to meet claims, or

(c)  for the purpose of requiring the licensed insurer to achieve early resolution of compensation claims, and early payment under Part 3.2, at particular levels, or

(d)  for the purpose of the efficiency of the motor accidents scheme under this Act generally, or

(e)  relating to the provision of information concerning claims and profits.

(2)  A licensed insurer does not contravene a condition of a kind referred to in subsection (1) (c) if the insurer establishes that the insurer furnished a report to the Authority within a reasonable period and that the report sets out reasonable grounds for justifying the contravention.

163   Matters not subject to conditions of licences

(cf s 105 (1A) and (5) MAA)

(1)  A condition of a licence under this Part must not be prescribed by the regulations or imposed, revoked or varied by the Authority if this would give or be likely to give a competitive advantage to the licensed insurer over other licensed insurers.

(2)  A condition of a licence under this Part that requires or has the effect of requiring a licensed insurer to obtain a share of the insurance market specified in or determined in accordance with the terms of the condition is of no effect.

(3)  This section extends, in the case of a licence in force on the commencement of this Act, to conditions imposed or otherwise applicable before that commencement.

(4)  This section has effect despite anything to the contrary in sections 161 and 162.

164   Assignment of licences

(cf s 106A MAA)

(1)  A licensed insurer may, with the approval of the Authority, assign its licence to another licensed insurer or to a corporation to whom the Authority proposes to grant a licence.

(2)  The Authority must not approve the assignment of a licence unless the Authority is satisfied that the proposed assignee is able to meet the past, present and future liabilities of the assignor:

(a)  under any third-party policy in respect of which the assignor is the insurer, and

(b)  to the Motor Accidents Authority Fund, and

(c)  to any other licensed insurer.

165   Suspension of licences

(cf s 106B MAA)

(1)  The Authority may, by notice served on a licensed insurer, suspend the insurer’s licence and the insurer is thereby prohibited from issuing any third-party policies after such date as is specified in the notice for the purpose.

(2)  A licensed insurer who contravenes, whether by act or omission, the terms of any such notice is guilty of an offence.

Maximum penalty: 100 penalty units.

(3)  A suspension may be effected only if:

(a)  subject to subsection (4), a licensed insurer has contravened its licence or this Act or the regulations or the Insurance Industry Deed, or

(b)  the insurer ceases to be an insurer authorised to carry on business under the Insurance Act 1973 of the Commonwealth, or

(c)  a provisional liquidator, liquidator or official liquidator, or a receiver, receiver and manager, official manager or trustee, is appointed over all or any part of the assets or undertaking of the insurer, or

(d)  the insurer is given a direction under section 51 or 62 of the Insurance Act 1973 of the Commonwealth or an inspector is appointed to investigate the affairs of the insurer under Part V of that Act, or

(e)  after receiving a report under section 177, the Authority is of the opinion that the insurer is, or is likely to become, unable to meet its liabilities under this Act or under third-party policies taken to have been issued by it, or

(f)  there is any default by the insurer in the payment of principal or interest in excess of $100,000 under any debenture, or series of debentures, issued by the insurer (except where the default occurs because the insurer genuinely disputes its liability to make the payment), or

(g)  the insurer enters into, or resolves to enter into, any arrangement, composition or compromise with its creditors or any assignment for the benefit of its creditors, or proceedings are commenced to sanction any such arrangement, composition, compromise or assignment (except for the purposes of a reconstruction or amalgamation, on terms which have been approved by the Authority), or

(h)  an application (other than a frivolous or vexatious application) or an order is made for the winding up or dissolution of the insurer or a resolution is passed for the winding up or dissolution of the insurer (except for the purposes of a reconstruction or amalgamation, on terms which have been approved by the Authority), or

(i)  there is a change in the effective control of the insurer or the insurer becomes a subsidiary of a company of which it was not a subsidiary at the date of the issue of its licence, or

(j)  the Authority is of the opinion that the insurer has failed to comply at any time with a condition imposed on its authority to carry on insurance business under the Insurance Act 1973 of the Commonwealth, or

(k)  a person claiming to be a creditor by assignment or otherwise of the insurer for a sum exceeding $100,000 then due has served on the insurer, by leaving at its registered office, a demand requiring the insurer to pay the sum so claimed to be due, and the insurer has for 3 weeks thereafter failed to pay the sum or to secure or compound for it to the satisfaction of the person claiming to be a creditor, or

(l)  there is returned unsatisfied, in whole or part, any execution or other process issued on a judgment, decree or order of any court in favour of a creditor of the insurer and the amount unsatisfied exceeds $100,000, or

(m)  the insurer has agreed to the suspension.

(4)  If the contravention by a licensed insurer of its licence or this Act or the regulations or the Insurance Industry Deed is capable, in the opinion of the Authority, of being remedied within 21 days after the contravention occurred (or such longer period as the Authority, having regard to the nature of the contravention and the need to protect the interests of policy holders and other persons, may reasonably allow), the Authority must not suspend the licence during that period.

(5)  The Authority may, by notice served on the licensed insurer, terminate the suspension of the insurer’s licence if the Authority is satisfied that the licensed insurer is able to comply with the requirements that would be imposed on the licensed insurer if it were then to be granted a licence for the first time.

166   Imposition of civil penalty on or censure of licensed insurer

(1)  If the Authority is satisfied that a licensed insurer has contravened its licence or this Act or the regulations or the Insurance Industry Deed, the Authority may, instead of suspending the insurer’s licence:

(a)  impose a civil penalty on the insurer not exceeding $50,000, or

(b)  issue a letter of censure to the insurer.

(2)  Before imposing a civil penalty, the Authority is required to refer the matter to a special committee for advice and to consider any advice provided by the committee.

(3)  Any such special committee:

(a)  is to comprise the Chairperson of the Board, a nominee of the Insurance Council of Australia Limited and another member nominated jointly by the Authority and that Council, and

(b)  is required to give the licensed insurer concerned an opportunity to make written submissions with respect to the alleged contravention, but is not required to conduct a hearing into the matter.

If that Council fails to make a nomination for the purposes of constituting any such special committee within the time required by the Authority, the Minister may make that nomination on its behalf.

(4)  A civil penalty that has been imposed under this section may be recovered by the Authority in a court of competent jurisdiction as a debt due to the Authority.

(5)  A civil penalty that is paid or recovered is payable into the Motor Accidents Authority Fund.

167   Cancellation of licences

(cf s 107 MAA)

(1)  The Authority may, by notice served on the licensed insurer, cancel a licence granted under this Part.

(2)  The Authority may cancel a licence for any reason it thinks fit, but must give the reasons for its decision.

(3)  Without affecting the generality of subsection (2), the Authority may cancel a licence for reasons that relate to the motor accidents scheme under this Act generally, whether or not the reasons relate to the efficiency and conduct of the licensed insurer.

(4)  The Authority must, as far as practicable, give a licensed insurer whose licence it proposes to cancel an opportunity to make representations on the matter.

(5)  A licence surrendered by a licensed insurer is not cancelled until the Authority approves of the surrender.

(6)  The Authority must not cancel a licence unless the Authority is satisfied that the licensed insurer has discharged all of its past, present and future liabilities:

(a)  under any third-party policy in respect of which it is the insurer, and

(b)  to the Motor Accidents Authority Fund, and

(c)  to any other licensed insurer,

      or that the insurer has provided security or entered into other arrangements satisfactory to the Authority in respect of those liabilities.

(7)  If the Authority is unable to cancel a licence because of any such liabilities, the Authority may, instead, impose a condition on the licence that prohibits the insurer from issuing any further third-party policies.

168   Assignment of policies following cancellation of licence and in other cases

(cf s 108 MAA)

(1)  In this section:

insurer means a licensed insurer, and includes a person whose licence has been cancelled or has otherwise ceased to be in force.

(2)  The Authority may assign the third-party policies of an insurer to another insurer if:

(a)  the licence of the insurer is cancelled or otherwise ceases to be in force, or

(b)  the Authority is satisfied that it is necessary to do so to ensure compliance with any conditions to which a licence is subject.

(3)  Policies may be assigned under this section by notice served by the Authority on the insurers concerned.

(4)  On the service of any such notice:

(a)  the policies of insurance to which it relates are cancelled as from the date and time specified in the notice, and

(b)  the insurer to whom those policies are assigned is taken (as from the time and date of cancellation) to have issued third-party policies on the same terms as, and for the balance of the periods of, those policies.

(5)  On the cancellation of a third-party policy under subsection (4) (a), the insurer whose policy is cancelled must pay to the insurer to whom the policy is assigned:

(a)  the same proportion of the premium paid or to be paid in respect of the policy as the balance of the indemnity period of the policy bears to the whole indemnity period of the policy, and

(b)  such additional amount as the Authority directs relating to the income from investment and the management fee with respect to the premium.

(6)  Any amount payable under subsection (5) to an insurer may be recovered by the insurer as a debt in a court of competent jurisdiction.

(7)  The effect of the cancellation of a third-party policy under this section is to terminate the indemnity period of the policy but, subject to this section, without affecting any right, obligation or liability acquired, accrued or incurred under the policy in respect of that period before its termination.

169   Records and evidence relating to licences

(cf s 109 MAA)

(1)  The Authority must keep records in relation to all licences granted by the Authority under this Part, including particulars of:

(a)  the granting, refusal, conditions, suspension and cancellation of licences, the assignment of licences and notices served under section 165, and

(b)  such other matters relating to licences as the Authority thinks fit.

(2)  A certificate purporting to be signed by the Chief Executive Officer and certifying that on any date or during any period specified in the certificate the particulars set forth in the certificate as to any of the matters referred to in subsection (1) did or did not appear on or from the records is (without the production of any record or document on which the certificate is founded) admissible in any proceedings and is evidence of the particulars certified in and by the certificate.

170   Reviews of licensing decisions by Administrative Decisions Tribunal

(cf s 109A MAA)

(1)  A person may apply to the Administrative Decisions Tribunal for a review of any of the following decisions of the Authority under this Part:

(a)  a decision to refuse the person’s application for a licence,

(b)  a decision to impose a condition on the person’s licence,

(c)  a decision to vary any condition imposed on the person’s licence,

(d)  a decision to refuse to grant approval to the person to assign a licence,

(e)  a decision to suspend the person’s licence,

(f)  a decision to impose a fine on the person,

(g)  a decision to cancel the person’s licence.

(2)  Despite the provisions of Division 2 of Part 3 of Chapter 5 of the Administrative Decisions Tribunal Act 1997, the Tribunal may not order that a decision referred to in subsection (1) be stayed pending the determination of an application for its review.