4DInsurance contracts for other risks that cannot reasonably be placed in Australia

4D Insurance contracts for other risks that cannot reasonably be placed in Australia

(1) For subsection 3A(1) of the Act, a contract of insurance is specified if an Australian insurance broker certifies in writing that the risk insured under that contract cannot reasonably be placed with an Australian insurer. (2) In deciding whether the risk insured under that contract cannot reasonably be placed with an Australian insurer, the Australian insurance broker must be satisfied, on reasonable grounds, that: (a) there is no Australian insurer that will insure against the risk; or (b) the terms (including price) on which any Australian insurer will insure against the risk are substantially less favourable to the insured than the terms on which the unauthorised foreign insurer will insure against the risk; or (c) insurance with an Australian insurer would be substantially less favourable to the insured than with
an unauthorised foreign insurer because of other circumstances.

Note: Example for paragraph (c)

Note: The insured and the unauthorised foreign insurer have a pre‑existing relationship, and the maintenance of that relationship will have significant benefits for the insured.

(3) The Australian insurance broker must make reasonable inquiries about the matters mentioned in subregulation (2). (4) The Australian insurance broker must keep written records of: (a) its inquiries into the matters mentioned in subregulation (2); and (b) its reasons for being satisfied of those matters. (5) If requested by the insured, the Australian insurance broker must give a copy of the certificate under subregulation (1) to the insured.

Note: Failure by an Australian insurance broker to properly discharge the obligations in this regulation may be a matter affecting the financial services licence of that broker. See generally Part 7.6 of the Corporations Act 2001.

(6) In this regulation:

Australian insurance broker means a person that holds an Australian financial services licence (within the meaning given by the Corporations Act 2001), and who is permitted under section 923B of that Act to assume or use the expression insurance broker or general insurance broker in relation to the person’s business or services.

Australian insurer means a person authorised or permitted under the Act (including by way of a determination under subsection 7(1) of the Act) to carry on insurance business in Australia.