Explanatory Memorandum
(Circulated by authority of the Hon Mark Vaile MP, Minister for Trade)Schedule 4 - Life Insurance
132. The Life Insurance Act 1995 (Life Act) is based on the notion that only entities incorporated in Australia are able to conduct life insurance business in Australia. Permitting a foreign life insurer to establish a branch in Australia to conduct life insurance business requires special provisions to be inserted in the Life Act.
133. Section 16ZD. For an entity to establish a branch in Australia for the purpose of carrying on life insurance business, it must be incorporated in a foreign country, be authorised to carry on life insurance business in that foreign country, or part of that foreign country, and meet the conditions contained in the regulations of the Life Act. These regulations may include a list of countries, determined by the Government, in which a foreign life insurer must be incorporated and authorised to be eligible to establish a branch in Australia.
134. Section 16ZE. When a foreign life insurer is authorised to establish a branch in Australia, authority is conveyed on the incorporated entity. However, the provisions of the Life Act apply only to the business of the branch, that is, the life business conducted by the foreign insurer in Australia.
135. Section 16ZF. To conduct life insurance business through a branch in Australia, the branch must establish a Compliance Committee. The Compliance Committee must be invested by the Board of the parent company with the powers necessary to ensure it can meet the requirements placed upon directors of locally incorporated life insurance companies under the Life Act and associated prudential standards.
136. Section 16ZG. A life insurance branch must provide APRA with an address for service in Australia. The Life Act does not contain a similar requirement for locally incorporated insurers, with APRA relying on the Acts Interpretation Act 1901 to ensure insurers provide it with an address for service.
137. An amendment is required to paragraphs 31(c) and (d) of the Life Act to ensure the provisions of the Life Act in relation to statutory funds do not apply to the overseas operations of foreign companies with branches in Australia.
138. An amendment is required to section 76 of the Life Act to ensure the provisions of the Life Act in relation to financial records of overseas funds do not apply to the overseas operations of foreign companies with branches in Australia.
139. An amendment is required to section 92 of the Life Act to indicate that references to a director in this section refer to a member of the Compliance Committee when the entity in question is a branch.
140. An amendment is required to section 113 of the Life Act to ensure the provisions of the Life Act in relation to annual actuarial investigations do not apply to the overseas operations of foreign companies with branches in Australia.
141. An amendment is required to section 165 of the Life Act to ensure the provisions of the Life Act in relation to the vesting of managerial powers to a judicial manager do not apply to the overseas operations of foreign companies with branches in Australia.
142. An amendment is required to section 230B of the Life Act to indicate that references to a director in this section refer to a member of the Compliance Committee when the entity in question is a branch.
143. An amendment is required to subsection 230F(5) of the Life Act to indicate that references to a director in this subsection refer to a member of the Compliance Committee when the entity in question is a branch.
144. An amendment is required to subsection 235(1) and (2) of the Life Act to ensure that the provisions of the Life Act in relation to injunctions apply to members of the Compliance Committee of a branch.
145. Amendments to subsections 235(3) and 235(5) of the Life Act are required to take account of the amendments to subsection 235(1) and (2).
146. Amendment to subsection 235(7) and 235(8) are necessary to ensure that the provisions of these subsections extend to the members of the Compliance Committee of a life insurance branch.
147. An amendment is required to subsection 242(1) of the Life Act to ensure that the provisions of the Life Act in relation to voting by post by non-shareholder members of life companies do not apply to the overseas operations of foreign companies with branches in Australia.
148. An amendment is required to subsection 245 of the Life Act to indicate that references to a director in this section refer to a member of the Compliance Committee when the entity in question is a branch.
149. Amendments to the Schedule. The definition of a company is extended to include an eligible foreign life insurance company.
150. Amendment to the Schedule. A definition of a Compliance Committee is added. A Compliance Committee has the meaning given by subsection 16ZF(1).
151. Amendment to the Schedule. The meaning of the word 'director' in relation to an eligible life insurance company, means a member of the Compliance Committee of the company.
152. Amendments to the Schedule. A definition of an eligible foreign insurance company is added. It has the meaning given to it by section 16ZD.