Life Insurance Regulations 2024

I, General the Honourable David Hurley AC DSC (Retd), Governor‑General of the Commonwealth of Australia, acting with the advice of the Federal Executive Council, make the following regulations.

Dated     19 February 2024

David Hurley

Governor‑General

By His Excellency’s Command

Stephen Jones

Assistant Treasurer
Minister for Financial Services

Contents

Part 1—Preliminary

1 Name

2 Commencement

3 Authority

4 Definitions

Part 2—Explanation of key concepts

5 Life policy—minimum terms of annuities

Part 2B—Special provisions relating to Australian branches of foreign life insurance companies

6 Eligible foreign life insurance company

Part 9—Transfers and amalgamations of life insurance business

7 Application for confirmation of scheme

8 Documents to be given to APRA

Part 10—Provisions relating to policies

9 Interest on overdue premiums—prescribed terms

10 Unclaimed money—interest payable

11 Calculation of net claim value of policy

Part 12—Application, transitional and saving provisions

Division 1—Provisions relating to this instrument as originally made

12 Application of section 7

13 Application of section 8

Part 13—Dictionary

14 Definition of approved body

15 Definition of derivative

16 Definition of superannuation policy

Schedule 1—Approved bodies

1 Approved bodies

Part 1—Preliminary

1  Name

  This instrument is the Life Insurance Regulations 2024.

2  Commencement

 (1) Each provision of this instrument specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.

Note: This table relates only to the provisions of this instrument as originally made. It will not be amended to deal with any later amendments of this instrument.

 (2) Any information in column 3 of the table is not part of this instrument. Information may be inserted in this column, or information in it may be edited, in any published version of this instrument.

3  Authority

  This instrument is made under the Life Insurance Act 1995.

4  Definitions

Note: A number of expressions used in this instrument are defined in the Act, including the following:

(a) Court;

(b) policy.

  In this instrument:

Act means the Life Insurance Act 1995.

allocated annuity policy means a policy that provides for an annuity:

 (a) that is paid, within a specified range of minimum and maximum payments, from an identifiable lump sum; or

 (b) that arises under a contract that meets the standards of subregulation 1.05(4) of the Superannuation Industry (Supervision) Regulations 1994.

certified copy of a document means a copy of the document that has been certified in writing, by a person prescribed for the purposes of paragraph 8(b) of the Statutory Declarations Act 1959, to be a true copy of the document.

deferred annuity policy means a policy that provides for an annuity that is not presently payable.

immediate annuity policy means a policy that provides for an annuity that is presently payable.

Part 2—Explanation of key concepts

5  Life policy—minimum terms of annuities

  For the purposes of paragraph 9(1)(d) of the Act, the term of 10 years is prescribed.

Part 2B—Special provisions relating to Australian branches of foreign life insurance companies

6  Eligible foreign life insurance company

 (1) For the purposes of paragraph 16ZD(1)(e) of the Act, the following condition is specified: the condition that:

 (a) the body corporate:

 (i) is authorised to carry on life insurance business in China; and

 (ii) is incorporated in China; or

 (b) the body corporate:

 (i) is authorised to carry on life insurance business in Japan; and

 (ii) is incorporated in Japan; or

 (c) the body corporate:

 (i) is authorised to carry on life insurance business in New Zealand; and

 (ii) is incorporated in New Zealand; or

 (d) the body corporate:

 (i) is authorised to carry on life insurance business in the Republic of Korea; and

 (ii) is incorporated in the Republic of Korea; or

 (e) the body corporate:

 (i) is authorised to carry on life insurance business in the United States of America; and

 (ii) is incorporated in the United States of America.

 (2) In paragraph (1)(a) of this section, a reference to China does not include a reference to the following members of the World Trade Organization:

 (a) Hong Kong, China;

 (b) Macao, China;

 (c) Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu.

Part 9—Transfers and amalgamations of life insurance business

7  Application for confirmation of scheme

 (1) For the purposes of paragraph 191(2)(e) of the Act, the following requirement is prescribed: the application must not be made earlier than 15 days after the first day on which an approved summary of the scheme has been given to every affected policy holder in accordance with paragraph 191(2)(c) of the Act.

 (2) This section does not apply if, under subsection 191(5) of the Act, the Court dispenses with the need for compliance with paragraph 191(2)(c) of the Act in relation to the scheme.

8  Documents to be given to APRA

 (1) For the purposes of subsection 197(1) of the Act, if any part of the life insurance business carried on by a life company is transferred to, or amalgamated with the life insurance business of, another company, the latter company must give APRA the following documents:

 (a) a statement of the nature and terms of the transfer or amalgamation;

 (b) a certified copy of each of the following documents:

 (i) the scheme providing for the transfer or amalgamation;

 (ii) each actuarial report or other report (if any) on which the scheme, and the agreement or deed by which the transfer or amalgamation is carried out, are founded;

 (iii) the agreement or deed by which the transfer or amalgamation is carried out;

 (iv) the Court order confirming the scheme;

 (v) a statement of the assets and liabilities of each company affected by the scheme (within the meaning of section 189 of the Act);

 (c) a statutory declaration by the principal executive officer of the latter company:

 (i) setting out, in relation to the transfer or amalgamation, each payment made; and

 (ii) setting out, in relation to the transfer or amalgamation, a reasonable estimate of each payment to be made in the future; and

 (iii) stating that he or she reasonably believes that no other payment has been made, or will be made, in relation to the transfer or amalgamation, by, or with the knowledge of, a party to the agreement or deed by which the transfer or amalgamation is carried out.

 (2) For the purposes of subsection 197(2) of the Act, and subject to subsection (3) of this section, the documents must be given to APRA within 30 days after the transfer or amalgamation is completed.

 (3) A company may apply, in writing, to APRA, before the end of the 30 days referred in subsection (2), for an extension of the time in which to give the documents to APRA.

 (4) If APRA receives an application under subsection (3) from a company for an extension of time in which to give documents to APRA, APRA must, within 14 days after receiving the application:

 (a) either:

 (i) if APRA believes that, when the application was made, it was not reasonably possible for the company to give the documents to APRA within the 30 days referred to in subsection (2)—give the company an extension of time of no longer than 30 days; or

 (ii) otherwise—refuse the application; and

 (b) give the company written notice of APRA’s decision on the application.

 (5) For the purposes of subparagraph (zt)(ii) of the definition of reviewable decision in subsection 236(1) of the Act, a decision to refuse an application under subparagraph (4)(a)(ii) of this section is prescribed.

Part 10—Provisions relating to policies

9  Interest on overdue premiums—prescribed terms

 (1) For the purposes of subsection 210(3) of the Act, the following term is prescribed: the term that the rate of interest that may be charged on an overdue premium on a day is the interest rate worked out using the following formula:

 (2) The 10 year Commonwealth Government bond yield is the mean of the 10 year Commonwealth Government bond yields (as shown in figures published by the Reserve Bank of Australia) at the end of each of the last 6 successive half financial years ending before that day, expressed as a percentage.

 (3) If the mean worked out under subsection (2) is not a multiple of 0.25%, round it down to the nearest multiple of 0.25%.

10  Unclaimed money—interest payable

 (1) This section applies if:

 (a) a life company paid unclaimed money to the Commonwealth under section 216 of the Act; and

 (b) some or all of the unclaimed money is paid to the life company under subsection 216(7) of the Act.

 (2) For the purposes of paragraph 216(7A)(a) of the Act, this section sets out how to work out the amount of interest that is to be paid in relation to the payment made to the life company.

 (3) If the life company paid the unclaimed money to the Commonwealth in more than one payment, work out the interest separately for each payment to the Commonwealth.

 (4) To avoid doubt, if the Commonwealth pays the unclaimed money to the life company in more than one payment, work out the interest separately for each payment to the life company.

Example: A life company pays $100 of unclaimed money to the Commonwealth on day 1, and $200 on day 2. On day 3, the Minister causes $175 of unclaimed money to be paid to the life company, consisting of:

(a) the $100 of unclaimed money paid to the Commonwealth on day 1; and

(b) $75 of the unclaimed money paid to the Commonwealth on day 2.

 Under subsection (3), interest for the $100 and the $75 are worked out separately.

 On day 4, the Minister causes $125 of unclaimed money to be paid to the life company, being the remainder of the unclaimed money paid to the Commonwealth on day 2. Under subsection (4), interest for the $125 is worked out separately from the interest for the $75 mentioned in paragraph (b) of this example.

Meaning of interest period

 (5) For the purposes of this section, the interest period is the period that:

 (a) starts on the later of:

 (i) 1 July 2013; and

 (ii) the day when the life company paid the unclaimed money to the Commonwealth; and

 (b) ends on the 14th day after the day on which the Minister causes the unclaimed money to be paid to the life company.

Interest

 (6) Work out the amount of interest by adding together the interest for each financial year that occurs wholly or partly during the interest period.

 (7) Work out the interest for each financial year using the following formula:

where:

amount means the amount of the unclaimed money paid to the life company plus the interest (if any) worked out for each earlier financial year that occurs wholly or partly during the interest period.

days interest payable means the number of days in the financial year that occur during the interest period.

interest rate has the meaning given by subsection (9).

 (8) If the amount worked out using the formula in subsection (7) is not a whole number of dollars and cents, round the amount down to the nearest whole number of dollars and cents.

Meaning of interest rate

 (9) For the purposes of subsection (7), the interest rate for a financial year is the percentage worked out using the following formula:

where:

index number for a March CPI quarter means the All Groups Consumer Price Index number (being the weighted average of the 8 capital cities) first published by the Australian Statistician for the quarter.

latest March CPI quarter means the latest March CPI quarter for which the index number is published before the start of the financial year.

March CPI quarter means a period of 3 months ending on 31 March.

second latest March CPI quarter means the second latest March CPI quarter for which the index number is published before the start of the financial year.

 (10) If the interest rate is not a multiple of 0.0001%, round it up to the nearest multiple of 0.0001%.

 (11) If the interest rate is less than 0%, round it up to 0%.

11  Calculation of net claim value of policy

 (1) For the purposes of subsection 223(2) of the Act, this section sets out how to calculate the net claim value of a policy at a particular time.

 (2) The net claim value is the amount worked out using the following formula:

where:

amount payable in respect of claim means:

 (a) if, at that particular time:

 (i) the policy has matured; or

 (ii) the person whose life is insured under the policy has died;

  the amount payable on a claim arising under the policy in respect of that maturing or death; or

 (b) otherwise—the amount that, were the policy to be voluntarily terminated at that particular time, would be payable on a claim arising under the policy in respect of that termination.

debts means the total amount of any debts that, at that particular time, are:

 (a) owed to the relevant life company under the policy; or

 (b) secured by the policy.

Part 12—Application, transitional and saving provisions

Division 1—Provisions relating to this instrument as originally made

12  Application of section 7

  Section 7 applies in relation to an application for confirmation of a scheme made on or after the commencement of this section.

13  Application of section 8

 (1) Despite the repeal of regulation 9.04 of the Life Insurance Regulations 1995 by the Treasury Laws Amendment (Insurance) Regulations 2024, that regulation continues to apply, on and after the commencement of this section, in relation to a transfer or amalgamation that is completed before that commencement.

 (2) Section 8 of this instrument applies in relation to a transfer or amalgamation that is completed on or after the commencement of this section.

Part 13—Dictionary

14  Definition of approved body

  For the purposes of the definition of approved body in Schedule 1 to the Act, approved body has the meaning given by Schedule 1 to this instrument.

15  Definition of derivative

  For the purposes of paragraph (b) of the definition of derivative in Schedule 1 to the Act, something is prescribed if any of paragraphs 6(2)(a) to (h) of the Payment Systems and Netting Regulations 2001 apply to an obligation under that thing.

Note: Paragraphs 6(2)(a) to (h) of the Payment Systems and Netting Regulations 2001 identifies obligations that are not eligible obligations in relation to a close‑out netting contract. These include obligations under credit facilities, reciprocal purchase agreements (otherwise known as repurchase agreements), sell‑buyback arrangements, securities loan arrangements, contracts of insurance and managed investment schemes.

16  Definition of superannuation policy

  For the purposes of paragraph (b) of the definition of superannuation policy in Schedule 1 to the Act, the following kind of life policy is prescribed: a life policy that:

 (a) is an allocated annuity policy, a deferred annuity policy or an immediate annuity policy; and

 (b) is maintained for the purposes of superannuation or retirement.

Schedule 1—Approved bodies

Note: See section 14.

1  Approved bodies

  Each exchange, market, clearing house, body or entity listed in the following table is an approved body.