Commonwealth Consolidated Acts

LIFE INSURANCE ACT 1995

TABLE OF PROVISIONS

   PART 1--PRELIMINARY

   1.      Short title [see Note 1]  
   2.      Commencement [see Note 1]  
   3.      Objects of Act  
   4.      Additional operation of Act  
   5.      Exclusion of certain State insurance  
   6.      Extension of Act to Norfolk Island  
   7.      General administration of Act  
   7A.     Determination that certain provisions do not apply  
   7B.     Breach of condition of a determination under section 7A  
   8.      Dictionary  

   PART 2--EXPLANATION OF KEY CONCEPTS

   9.      Life policy  
   9A.     Continuous disability policy  
   10.     Issue and ownership of policies  
   11.     Life insurance business  
   12.     Classes of life insurance business  
   12A.    Declarations that insurance or annuity business is life insurance business  
   12B.    Declarations that other financial business is life insurance business  
   13.     Business of a statutory fund  
   14.     Investment account benefits, investment-linked benefits  
   15.     Participating, non-participating benefits  
   16.     Related companies  

   PART 2A--SPECIAL PROVISIONS RELATING TO LIFE COMPANIES THAT ARE FRIENDLY SOCIETIES

           Division 1--Preliminary

   16A.    Overview  
   16B.    Definitions  

           Division 2--Friendly societies and how this Act applies to them

   16C.    What is a friendly society?  
   16D.    Act applies to friendly societies in accordance with this Part  
   16E.    Restriction on use of expression friendly society  

           Division 3--Modified operation of key concepts

   16F.    Issue, ownership etc. of policies  

           Division 4--Modified operation of provisions relating to statutory funds

              Subdivision 1--Modifications

   16G.    Act generally applies as if references to a statutory fund were references to an approved benefit fund  
   16H.    Modification of section 34  
   16I.    Modification of section 38  
   16J.    Modification of section 43  
   16K.    Modification of section 45  

              Subdivision 2--Approved benefit fund rules

   16L.    Approval of benefit fund rules  
   16N.    When benefit fund rules approved by APRA come into force  
   16O.    Benefit fund rules approved by APRA and in force form part of company's constitution  
   16P.    Amendment of approved benefit fund rules not effective unless approved by APRA  
   16Q.    Amendment of approved benefit fund rules on initiative of friendly society  
   16R.    Amendment of approved benefit fund rules as required by APRA  
   16T.    When amendment of benefit fund rules approved or determined by APRA come into force  
   16U.    Approval of consequential amendments of company's constitution  
   16V.    Consequential amendments of constitution as required by APRA  
   16X.    When consequential amendments approved or determined by APRA come into force  
   16Y.    Consequential amendments approved by APRA and in force take effect as amendments of company's constitution  
   16Z.    Contractual effect of approved benefit fund rules and policies  

           Division 5--Other modifications

   16ZA.   Assignment of an interest in a benefit fund that is, because of section 16F, taken to be a policy  
   16ZB.   Certain friendly societies may continue to carry on health insurance business--modified operation of this Act  
   16ZC.   Other modifications  

   PART 2B--SPECIAL PROVISIONS RELATING TO AUSTRALIAN BRANCHES OF FOREIGN LIFE INSURANCE COMPANIES

   16ZD.   Eligible foreign life insurance company  
   16ZE.   Act does not apply to foreign life insurance business of eligible foreign life insurance company  
   16ZF.   Compliance Committee of eligible foreign life insurance company  
   16ZG.   Address for service of eligible foreign life insurance companies  

   PART 3--REGISTRATION OF LIFE COMPANIES

   17.     When registration is required  
   18.     Certain activities not regarded as carrying on life business  
   19.     Certain persons taken to carry on life business etc.  
   20.     Application for registration  
   21.     Decision on application for registration  
   22.     Conditions of registration  
   26.     Cancellation of registration: defunct company  
   27.     Voluntary deregistration  

   PART 4--STATUTORY FUNDS OF LIFE COMPANIES

           Division 1--General requirements

   29.     What is a statutory fund?  
   30.     Outline of requirements regarding statutory funds  
   31.     Requirement that company have statutory funds  
   32.     Duty of company in relation to statutory funds  
   33.     Notice to APRA when fund established  
   34.     Assets of statutory fund  
   35.     Identification of policies referable to statutory fund  
   36.     Payments to statutory fund  
   37.     Capital payments to statutory funds  
   38.     Expenditure and application of statutory fund  
   39.     Prohibition of reinsurance between funds  
   40.     Mortgages etc. of assets  
   41.     Effect of non-compliance with section 38 ¾general  
   41A.    Effect of non-compliance with section 38 ¾certain classes of transactions  
   42.     Investment performance guarantee--limit of certain liabilities  
   43.     Investment of statutory funds  
   44.     Reporting of restricted investments  
   45.     Transfer of assets between funds  
   46.     Restriction on restructure or termination of statutory funds  
   47.     Ascertainment of income and outgoings of a statutory fund  

           Division 2--Duties and liabilities of directors etc

   48.     Duty of directors in relation to statutory funds  
   49.     APRA may give notice  
   50.     Liability of directors  
   51.     APRA's power to sue in the name of a company  

           Division 3--Restructure and termination of statutory funds

   52.     Restructure of statutory funds  
   53.     Termination of statutory funds  
   54.     Prudential Rules may deal with transitional matters  

           Division 4--Additional requirements for transfer of policies between statutory funds by endorsement

   55.     Additional requirements for transfer of policies between statutory funds by endorsement  

           Division 5--Allocation of profits and losses and capital payments

   56.     Interpretation  
   57.     Obligation to allocate operating profit or loss  
   58.     Operating profit etc.  
   59.     Allocation of operating profit etc.  
   60.     Basis of allocation of operating profit etc.  

           Division 6--Distribution of retained profits and shareholders' capital

   61.     Interpretation  
   62.     Distribution of retained profits  
   63.     Distribution of shareholders' capital  

   PART 6--FINANCIAL MANAGEMENT OF LIFE COMPANIES

           Division 1--Preliminary

   74.     Interpretation  

           Division 2--Financial records and statements

   75.     Financial records--Australian and Australian/overseas funds  
   76.     Financial records--overseas funds  
   77.     Financial year of a life company  
   78.     Treatment of income and outgoings relating to mixed business  
   79.     Treatment of income or outgoings relating to 2 or more categories of business etc.  
   80.     Basis of apportionment  
   81.     Treatment of appreciation and depreciation of assets  
   83.     Life company to have auditor  
   84.     Appointment of auditor  
   85.     Ending an appointment as auditor  
   87.     Notification of appointment etc. of auditor  
   88.     Auditor's obligation to report to company and APRA  
   88A.    Auditor may give information to APRA  
   89.     Qualified privilege of auditors  

           Division 3--Appointed actuaries

   93.     Appointment  
   94.     Ending an appointment as actuary  
   95.     Notification of appointment etc.  
   96.     Compliance with prudential standards  
   97.     Role of actuary  
   98.     Actuary's obligation to report to APRA  
   98A.    Appointed actuary may give information to APRA  
   99.     Qualified privilege of appointed actuary  

           Division 8--Miscellaneous

   114.    Method of valuing policy liabilities  
   124.    Policy owner's right to copy of annual financial statements and annual return  
   125.    Referring matters to professional associations for auditors and actuaries  
   125A.   APRA may direct removal of auditor or actuary  

   PART 7--MONITORING AND INVESTIGATION OF LIFE COMPANIES

           Division 1--Preliminary

   126.    Interpretation  
   127.    Appointment of authorised persons  
   128.    Associated company  
   129.    Related companies  

           Division 2--Monitoring life companies

   130.    Purpose of Division  
   131.    Requirement to give information to Regulator  
   132.    Requirement to produce records  
   132A.   Requirement to notify APRA of certain matters  
   133.    Access to premises  
   133A.   Enforceable undertakings  

           Division 3--Investigation by APRA

   135.    Giving of show cause notice  
   136.    Grounds for giving of show cause notice  
   137.    Decision to investigate  
   138.    Investigation of associated company  
   139.    Investigation procedure  
   140.    Access to premises for purposes of investigation  
   141.    Requirement to produce records  
   142.    Regulator's power to require assistance  
   143.    Application for warrant to seize records not produced  
   144.    Grant of warrant  
   145.    Powers if records produced or seized  
   146.    Powers if records not produced  
   147.    Offences related to investigations  
   149.    Regulator must give company written summary of conclusions  
   151.    Identity cards  

           Division 3A--Life companies required to comply with determinations of the Superannuation Complaints Tribunal

   151A.   Life companies must comply with determinations of the Superannuation Complaints Tribunal  

           Division 4--Special provisions relating to the execution of warrants

   152.    Interpretation  
   153.    Use of equipment to examine or process things  
   154.    Use of electronic equipment at premises  
   155.    Compensation for damage to electronic equipment  
   156.    Copies of seized things to be provided  

           Division 5--Protections in relation to information

              Subdivision A--Protection for whistleblowers

   156A.   Disclosures qualifying for whistleblower protection  
   156B.   Whistleblower protection for disclosures that qualify  
   156C.   Victimisation of whistleblowers prohibited  
   156D.   Right to compensation  
   156E.   Confidentiality requirement for company, company officers and employees and auditors  

              Subdivision B--Self-incrimination

   156F.   Self-incrimination  

   PART 8--JUDICIAL MANAGEMENT, OTHER EXTERNAL ADMINISTRATION AND WINDING UP

           Division 1--Judicial management

   157.    Application for order for judicial management  
   158.    Order for judicial management after investigation  
   159.    Order for judicial management on other grounds  
   160.    Commencement of judicial management  
   161.    Stay of proceedings during judicial management  
   162.    No judicial management except in accordance with this Act  
   163.    Appointment of judicial manager  
   164.    Remuneration of judicial manager  
   165.    Management vests in judicial manager  
   165A.   Effect on external administrator of judicial manager managing company  
   165B.   Judicial manager being in control not ground for denying obligation  
   166.    Continued application of other Parts of Act  
   167.    Court's control of judicial manager  
   168.    Powers of judicial manager  
   168A.   Judicial manager's additional powers to facilitate recapitalisation  
   168B.   Considering report before acting under section 168A  
   168C.   Act under section 168A not ground for denying obligation  
   169.    Application by APRA for instructions to judicial manager  
   170.    Request by APRA for information  
   171.    Duration of judicial management  
   172.    Cancellation of judicial management  
   173.    Judicial manager must conduct management efficiently and economically  
   174.    Disclaimer of onerous property  
   175.    Report by judicial manager  
   176.    Order of Court on report of judicial manager  
   177.    Transfer of business to another company  
   178.    Resignation  
   179.    Indemnity  
   179A.   Exceptions to Part IV of the Trade Practices Act 1974  

           Division 1A--Other external administration

   179B.   Relationship of this Division with Chapter 5 of the Corporations Act 2001  
   179C.   Involving APRA in applications to appoint external administrators of life companies  

           Division 2--Winding-up

   180.    Winding-up of life companies  
   181.    Order on application by APRA  
   182.    Operation of Corporations Act  
   183.    Notification to APRA regarding applications by liquidator  
   183A.   Application by liquidator for directions--voluntary winding up of friendly society  
   184.    Application by APRA for directions  
   185.    APRA's power to ask for information  
   186.    Determination of amounts to be treated as liabilities of life company  
   187.    Application of statutory fund assets  
   188.    Liability of directors for loss to statutory fund  

   PART 9--TRANSFERS AND AMALGAMATIONS OF LIFE INSURANCE BUSINESS

   189.    Interpretation  
   190.    Transfer or amalgamation of life insurance business  
   191.    Steps to be taken before application for confirmation  
   192.    Actuarial report on scheme  
   193.    Application to Court  
   194.    Confirmation of scheme  
   195.    Effect of confirmation etc.  
   196.    Costs of actuary's report  
   197.    Documents to be lodged in case of transfer or amalgamation  

   PART 10--PROVISIONS RELATING TO POLICIES

           Division 1--Issue of policies

   198.    Alteration of proposal and policy forms  
   199.    Capacity of young persons to insure etc.  

           Division 2--Assignments and mortgages

   200.    Assignment of policy  
   201.    Mortgages and trusts  
   202.    Effect of notice of trust etc.  
   203.    Transfer of policy after change of trustee  

           Division 2A--Restriction on assignment or commutation of payments under structured settlements and structured orders

   203A.   Definitions  
   203B.   Application of Division to tax-exempt annuities and lump sums  
   203C.   Assignments or commutations of tax-exempt annuities are generally not effective  
   203D.   Assignments or commutations of tax-exempt lump sums are not effective  
   203E.   Relationship with Division 2  

           Division 3--Protection of policies

   204.    Protection of interest of insured  
   205.    Protection of policy money on person's death  

           Division 4--Surrender values, paid-up policies and non-forfeiture of policies

   206.    Application of Division  
   207.    Surrender of policies  
   208.    Relaxation of company's obligations to surrender  
   209.    Paid-up policies  
   210.    Non-forfeiture of policies in certain cases of non-payment of premiums  

           Division 5--Payment of policy money

   211.    Probate or administration not necessary in certain cases--a single policy  
   212.    Probate or administration not necessary in certain cases--2 or more policies  
   213.    Death of policy owner who is not the life insured  
   214.    Company not bound to see to the application of money paid by it  
   215.    Power to pay money into Court  
   216.    Unclaimed money  
   217.    No deduction in respect of other policies  

           Division 6--Children's advancement policies

   218.    Interpretation  
   219.    Property in child's advancement policy  
   220.    Death or bankruptcy of policy owner  

           Division 7--Lost or destroyed policy documents

   221.    Lost or destroyed policy--issue of replacement policy document  
   222.    Form of replacement policy document  
   223.    Notice before issuing replacement policy document  
   224.    Claim under policy where policy document lost or destroyed  
   225.    Application of sections 221, 222, 223 and 224 to replacement policy document  

           Division 8--General

   226.    Registers  
   227.    Registration of policies  
   228.    Effect of suicide on policy  
   229.    Condition as to war risk void  
   230.    Policies not invalidated by contraventions of the Act  

   PART 10A--PRUDENTIAL STANDARDS AND DIRECTIONS

           Division 1--Prudential standards

   230A.   APRA may make prudential standards for life companies  

           Division 2--Directions

   230B.   APRA may give directions in certain circumstances  
   230C.   Direction not grounds for denial of obligations  
   230D.   Supply of information about issue and revocation of directions  
   230E.   Secrecy requirements  
   230F.   Non-compliance with a direction  

   PART 11--MISCELLANEOUS

   233.    Operation of State and Territory laws  
   233A.   Transfer by life insurance company to statutory fund  
   234.    Prohibition of mixed insurance business  
   235.    Injunctions  
   236.    Review of certain decisions [see Notes 3 and 4]  
   237.    Constitution and procedure of Tribunal  
   240.    Register of Life Companies  
   241.    Inspection of Register etc.  
   242.    Non-shareholder members of life company--voting by post  
   245.    Disqualified persons not to be directors, principal executive officers etc. of life companies  
   245A.   Court power of disqualification  
   245B.   Court power to revoke or vary a disqualification etc.  
   246.    Principal executive officer  
   247.    Protection of person who discloses information etc. under compulsion  
   248.    Offences  
   250.    Conduct by directors, servants and agents  
   251.    Compensation for acquisition of property  
   251A.   Authorising contracts etc. for protecting policy owners' interests and financial system stability  
   251B.   Borrowing funds for payments under authorised contracts etc.  
   252.    Prudential Rules  
   253.    Regulations  

   PART 12--HOW THIS ACT AFFECTS EXISTING LIFE COMPANIES ETC

   254.    Companies registered under Life Insurance Act 1945  
           SCHEDULE Dictionary