The life insurance industry in Australia is mainly regulated by two bodies; the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA). Both bodies have been given the mandate to protect consumers and businesses. The Life Insurance Act Australia ensures the protection of life insurance policyholders while also putting in place mechanisms to ensure the smooth running of life insurance businesses.
ASIC’s Role In Regulation
This is an independent body of government that concerns itself with the regulation of company and financial service laws by making sure that investors, creditors and consumers are protected by maintaining market integrity and conduct of advisers. Its main priorities involve ensuring the fairness and efficiency of financial markets, ensuring that licensing and registration is rightfully in place, making sure that the investors and consumers are well informed and capable of making sound decisions, understanding decisions made by the investors as well as the consumers, keeping the gatekeepers to account, and educating the investors on risk and reward so that they can make wise investment decisions. Some of the legislations that are administered by ASIC include the ASIC Act of 2001, the Corporations Act of 2001, the insurance Contracts Act of 1984 and the Superannuation Act of 1993.
APRA’s Role In Regulation
This body concerns itself mainly with the supervision and regulation of prudent practices of the banks, friendly societies, credit unions, life insurance companies and superannuation arrangements entitled to manage public funds. APRA mainly ensures that there are good management practices and standards through professionalism, foresight, accountability, integrity and collaboration. Some of the legislations that have been administered by APRA include the Banking Act of 1995, the General Insurance Reform Act of 2001, the Insurance Contracts Act of 1984, the Superannuation Industry Act of 1993 and the Life Insurance Act Australia of 1995.
Life Insurance Act Of 1995
This Act ensures three main things: that the insurers give holders of life insurance policies benefit payments in the instance of a claim; that the insurers transact their business in a manner appropriate of them and that there is proper regulation of actual insurance sales. The Life Insurance Act protects the interests of policyholders and potential life insurance policy applicants while making sure that the industry maintains its competitiveness and inattentiveness.
Key Objectives Of The Act
The main objectives of this piece of legislation are to restrict life insurance sales to companies that meet the requirements to sell them, to put controls over the requirements for life insurers in order to ensure their prudent management, enabling the supervision of transfers and amalgamations, making provisions for the protection of policyholders in the event that a life insurance company goes under, enabling supervision of life insurance companies by both ASIC and APRA, and finally to make provisions for legislative management of “weak” life insurance companies. Visit us for more information about life insurance cover.
The Life Insurance Act Australia 1995 has outlined a variety of requirements for registration by ASIC or APRA. It has also placed strict regulations on the handling of statutory funds, solvency and capital adequacy, transfers and amalgamations as well as the appointments of judicial managers.