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Administered by: Treasury
Published Date 16 May 2017

 

 

 

Notice varying conditions on Authorisation to carry on insurance business

 

Insurance Act 1973

 

 

TO: RealCover Insurances Pty Limited ACN 103 975 355 (the general insurer) 30-32 Wentworth Avenue, Sydney, NSW 2000

 

SINCE

 

A.                APRA issued to the general insurer an Authorisation to carry on insurance business in Australia under subsection 12(1) of the Insurance Act 1973 (the Act), on 22 December 2008  (the Authorisation); and

B.                 the Authorisation is subject to conditions,

 

I, Louis Serret, a delegate of APRA:

(i)                   under paragraph 13(1)(b) of the Act, VARY those conditions imposed on the Authorisation in the manner specified in the attached Schedule; and

(ii)                 under paragraph 13(1)(a) of the Act, IMPOSE those conditions on the Authorisation, specified in the attached Schedule.

 

When this Notice takes effect, the conditions which apply to the Authorisation are set out in the attached Schedule of consolidated conditions.

 

This Notice takes effect on 1 July 2017. Dated: 15 May 2017

[Signed]

 

Louis Serret

Acting Executive General Manager Specialised Institutions Division

 

Interpretation                                                                                        Document ID: 226297

In this Notice

APRA means the Australian Prudential Regulation Authority.


insurance business has the meaning given in section 3 of the Act.

prudential standard has the meaning given in section 3 of the Act.


Note 1


Under subsection 13(1) of the Act, APRA may, at any time, by written notice to the general insurer


impose conditions or additional conditions or vary or revoke conditions imposed on the insurer's authorisation under section 12 of the Act. The conditions must relate to prudential matters.


Note 2


Under subsection 13(2) of the Act, a condition may be expressed to have effect despite anything in


the prudential standards.


Note 3


Under subsection 13(4) of the Act, if APRA imposes, varies or revokes the conditions on a general


insurer's authorisation, APRA must give written notice to the insurer and ensure that notice that the action has been taken is published in the Gazette.


Note 4


Under subsection 14(1) of the Act, a general insurer commits an offence if:


(a)  the insurer does an act or fails to do an act; and

(b)  doing the act or failing to do the act results in a contravention of a condition of the insurer's authorisation under section 12 of the Act; and

(c)  there is no determination in force under subsection 7(1) of the Act, that subsection 14(1) of the Act does not apply to the insurer.

The penalty is 300 penalty units. Under subsection 14(1A) of the Act, where an individual commits an offence against subsection 14(1) of the Act, 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 14(1) of the Act, the individual is punishable, on conviction, by a penalty not exceeding 60 penalty units. Under subsection 14(2) of the Act, an offence against section 14 of the Act, is an offence of strict liability.


Note 5


Under subsection 13(6) of the Act, a decision to impose conditions, or additional conditions, or to


vary the conditions on the Authorisation are reviewable decisions to which Part VI of the Act applies. If you are dissatisfied with a reviewable decision, you may seek reconsideration of the decision by APRA in accordance with subsection 63(2) of the Act. The request for reconsideration must be in writing, must state the reasons for the request, and must be given to APRA within 21 days after the decision first comes to your notice or within such further period as APRA allows. If dissatisfied with APRA’s reconsidered decision confirming  or varying the first decision, you may, subject to the Administrative Appeals Act 1975, apply to the Administrative Appeals Tribunal for review of the reconsidered decision.

The address where written notice may be given to APRA is Level 12, 1 Martin Place, Sydney, NSW 2000.


Schedule - the conditions which are being varied

The existing condition(s) which are to be varied:

 

1.      The Company must obtain APRA’s written consent prior to any transfer or issue of shares.

 

2.      The Company is only authorised to carry on insurance business for the purpose of providing professional indemnity and public liability insurance to real estate agents.

 

 

The condition(s) as varied are:

 

1.      The general insurer must obtain APRA’s written consent prior to any transfer or issue of its shares.

 

2.      The general insurer is only authorised to carry on insurance business for the purpose of discharging liabilities arising under policies issued by it on or before 30 June 2017.


Schedule - the conditions being imposed

3.      From 1 July 2017, the general insurer will be treated as a ‘run-off insurer’ within the meaning contained in Prudential Standard GPS 001 Definitions,[1] and is to comply with the requirements of APRA’s Prudential Standards that apply to a run-off insurer.

 

4.      Except with the prior written approval of APRA, the general insurer must not, from 1 July 2017, conduct any other business apart from that outlined in Condition 2 or any other business that that gives rise to (or has the potential to give rise to) material revenue or expense amounts.

 

5.      Except with the prior written approval of APRA, the general insurer must not:

 

a.        Enter into, vary or terminate any contractual agreement or arrangement with REINSW or an associate of REINSW;

b.        Make any payment or transfer any assets to REINSW or an associate of REINSW;

c.        Enter into any dealing or transaction at the request of REINSW or an associate of REINSW; or

d.        Give any other form of financial assistance to REINSW or an associate[2] of REINSW.

 

6.      Except with the prior written approval of APRA, the general insurer may only invest its funds in deposits with a locally incorporated Authorised Deposit-taking Institution, Commonwealth or State Government bonds.

 

 

[1] Run-off insurer means an insurer that is closed to new business and has not written renewal business for a period of at least 12 months.

[2] Associate has the meaning set out in clause 4 of the Schedule 1 to the Financial Sector (Shareholdings) Act 1998.


Schedule of consolidated conditions

1.      The general insurer must obtain APRA’s written consent prior to any transfer or issue of its shares.

 

2.      The general insurer is only authorised to carry on insurance business for the purpose of discharging liabilities arising under policies issued by it on or before 30 June 2017.

 

3.      From 1 July 2017, the general insurer will be treated as a ‘run-off insurer’ within the meaning contained in Prudential Standard GPS 001 Definitions,[1] and is to comply with the requirements of APRA’s Prudential Standards that apply to a run-off insurer.

 

4.      Except with the prior written approval of APRA, the general insurer must not, from 1 July 2017, conduct any other business apart from that outlined in Condition 2 or any other business that that gives rise to (or has the potential to give rise to) material revenue or expense amounts.

 

5.      Except with the prior written approval of APRA, the general insurer must not:

 

a.        Enter into, vary or terminate any contractual agreement or arrangement with REINSW or an associate of REINSW;

b.        Make any payment or transfer any assets to REINSW or an associate of REINSW;

c.        Enter into any dealing or transaction at the request of REINSW or an associate of REINSW; or

d.        Give any other form of financial assistance to REINSW or an associate[2] of REINSW.

 

6.      Except with the prior written approval of APRA, the general insurer may only invest its funds in deposits with a locally incorporated Authorised Deposit-taking Institution, Commonwealth or State Government bonds.

 

 

 

[1] Run-off insurer means an insurer that is closed to new business and has not written renewal business for a period of at least 12 months.

[2] Associate has the meaning set out in clause 4 of the Schedule 1 to the Financial Sector (Shareholdings) Act 1998.