Commonwealth Consolidated Acts

INSURANCE ACT 1973 - SECT 62ZZC

             (1)  The Minister may declare that Division 3 applies in relation to a specified general insurer if:

                     (a)  the general insurer is under judicial management under Division 1 of Part VB; and

                     (b)  APRA has advised the Minister under this Division that APRA believes that:

                              (i)  the general insurer is insolvent as defined in section 95A of the Corporations Act 2001 ; or

                             (ii)  the general insurer is a foreign general insurer and is unable to pay, from its assets in Australia, all its debts that are liabilities in Australia other than pre‑authorisation liabilities, as and when those debts become due and payable.

Note 1:       Section 116A deals with assets and liabilities in Australia.

Note 2:       The declaration does not end the judicial management of the general insurer.

Declaration to specify amount for meeting entitlements

             (2)  The declaration must also specify the amount (if any) that is to be credited to the Financial Claims Scheme Special Account in connection with the application of Division 3 in relation to the declared general insurer. The amount must not be more than $20,000,000,000.

Declaration to specify amount for administration

             (3)  The declaration must also specify the amount (if any) that is to be credited to the APRA Special Account in connection with the administration of this Part in relation to the declared general insurer. The amount must not be more than $100,000,000.

Amendment of specification of amounts

             (4)  The Minister may amend a declaration made under subsection (1), but only to change the specification of an amount under subsection (2) or (3), within the limit set in that subsection.

Declaration cannot be revoked

             (5)  The Minister cannot revoke a declaration made under subsection (1).

Declaration or amendment not disallowable or subject to expiry

             (6)  A declaration made under subsection (1), or an amendment of the declaration, is a legislative instrument, but neither section 42 (disallowance) nor Part 6 (sunsetting) of the Legislative Instruments Act 2003 applies to the declaration or amendment.

Effect of declaration or amendment

             (7)  The declaration or amendment:

                     (a)  takes effect from the time it is made, despite subsections 12(1) and (2) of the Legislative Instruments Act 2003 ; and

                     (b)  has effect according to its terms.

Declaration not to specify general insurer by reference to class

             (8)  Subsection 13(3) of the Legislative Instruments Act 2003 does not apply to a declaration under subsection (1) specifying a general insurer.

Note:          This ensures that a declaration must specify a general insurer individually, and cannot specify it by reference to a class of general insurers.