Life Insurance Act 1995

Life policy covers contracts providing payment on death or life contingencies, annuities, continuous disability policies over three years, investment account contracts and investment linked contracts under s 9 and s 9A. Life insurance business comprises issuing or undertaking liability under life or sinking fund policies plus related business, excluding trade union benefits, registered organisation benefits, employer superannuation schemes and funeral schemes under s 11. Statutory fund means a fund in company records relating solely to life insurance business or a part thereof under s 29, with assets kept distinct under s 34 and applied only to fund liabilities, authorised investments or permitted distributions under s 38. Participating benefit means any benefit other than non participating under s 15. Friendly society means a Corporations Act 2001 company taken to be registered or determined by APRA under s 16C, subject to extensive modifications in Part 2A. Eligible foreign life insurance company means a foreign corporation authorised overseas with an Australian branch under s 16ZD. Judicial management and Life Insurance Act statutory management confer board powers on an external manager with moratoria on proceedings and enforcement under ss 161 to 161E and ss 179AR to 179AW. Statutory funds under ss 29, 31, 34 to 36, 38, 45 require segregation of life insurance assets and liabilities, with fair value transfers and equitable apportionment. Judicial management under ss 157 to 176 and statutory management under ss 179AA to 179AZB impose moratoriums on proceedings and enforcement while transferring board powers. Winding up under ss 180 to 188 prioritises statutory fund assets for policy liabilities under Corporations Act rules. Prudential standards and directions under ss 230A, 230AB, 230B address capital, governance and recapitalisation. Policy assignment under ss 200 to 203 requires registered memorandum of transfer for legal effect, with separate creation of mortgages or trusts. Unclaimed money under s 216 triggers ASIC reporting, Commonwealth payment and discharge of liability. Auditor and actuary duties under ss 88, 88B, 98, 98B mandate reporting of contraventions and cooperation with APRA.

The Act affects life companies, registered NOHCs and their subsidiaries under ss 15A, 28A, friendly societies under Part 2A, eligible foreign life insurance companies under Part 2B, policy owners, directors, appointed actuaries, principal auditors, liquidators and external administrators. APRA administers Parts 3 to 6, 8 to 9, ss 206 to 210, Part 10A and Part 12. ASIC administers Part 10 except ss 206 to 210 under s 7. Life companies, registered NOHCs, subsidiaries, appointed auditors and actuaries, policy owners, liquidators, judicial managers, statutory managers and directors are directly subject to obligations. Friendly societies are subject to modified voluntary winding up rules under s 180. Persons under 16 face no additional liability on assignment under s 200(5).

Life companies must maintain at least one statutory fund, credit all receipts to it, keep assets distinct and apply them only for permitted purposes under ss 31, 34, 36, 38. Directors owe a duty to policy owners referable to each statutory fund to take reasonable care to ensure Part 4 compliance and prioritise those owners interests over shareholders in conflict under s 48. Transfers between funds must be at equal value and fair and reasonable to policy owners as a group under s 45. APRA may issue remedial notices for Part 4 contraventions under s 49. Judicial and statutory managers must report and may sell business or recapitalise subject to safeguards under ss 175, 179AD, 179AF. Policy owners have rights to assignment by approved memorandum under s 200, protection of policy proceeds from creditors under ss 204 to 205, non forfeiture after three years premiums under s 210 and payment without probate for small amounts under ss 211 to 212. APRA may give directions on prudential grounds including recapitalisation under s 230B and ss 230AA to 230AM. Life companies must maintain statutory funds under s 31, credit all referable receipts under s 36, restrict asset application under s 38, notify APRA of financial breaches immediately under s 132A and report significant matters within 10 business days. Auditors must report contraventions to the body and APRA under ss 88(1) to (2) and notify undue influence within 28 days under s 90. Appointed actuaries must perform prudential standard functions and report significant contraventions under ss 97 to 98. Directors owe duties to prioritise statutory fund interests under s 48 and face liability for losses from contraventions on winding up under s 188. Judicial and statutory managers assume board powers under ss 165, 179AD with moratorium protections under ss 161 to 161E, 179AR to 179AW. Policy owners hold rights to surrender after three years premiums under s 207, paid up conversion under s 209 and non forfeiture under s 210. Transferees acquire all rights and liabilities on valid assignment under s 200(3). Companies are discharged from liability on unclaimed money payment under s 216(11).

Breach of registration conditions is a strict liability offence carrying 300 penalty units for a company and 60 for an individual under s 23. Failure to notify APRA of proposed external administrator appointment is a strict liability offence carrying 60 penalty units under s 179C. Non compliance with APRA directions is an offence under s 230F. Using friendly society without authority is a strict liability offence carrying 50 penalty units under s 16E. Breach of APRA determination conditions under s 7A is a strict liability offence carrying 60 penalty units under s 7B. APRA may apply for court ordered winding up under s 181 and the court may disqualify persons from acting as directors, actuaries or auditors under s 245A. APRA costs of statutory management have priority in winding up under s 179AZ. Non compliance with prudential standards or directions attracts 50 penalty units plus daily penalties under ss 230F, 230AL. Failure to report or pay unclaimed money is an offence of 50 penalty units under s 216(2), (5). Friendly society voluntary winding up lodgement failures carry 30 penalty units under s 180(5). APRA may accept enforceable undertakings under s 133A, issue show cause notices under s 135, investigate under ss 136 to 138, seek injunctions under s 235 and apply for judicial management or winding up under ss 157, 181. Disqualified persons are barred from key roles under ss 245 to 245C. Secrecy applies to certain directions under ss 231 to 231H.

The Act prevails over inconsistent Corporations Act 2001 provisions under s 251AA. It applies in addition to Chapter 5 of the Corporations Act for external administration under s 179B. Section 440B of the Corporations Act applies to third party property rights during management under ss 161C, 179AU. The Public Governance, Performance and Accountability Act 2013 does not apply to bodies under statutory management under s 179AY(3). The Act does not affect continued operation of the Financial Sector (Collection of Data) Act 2001 or Financial Accountability Regime Act 2023 under ss 166, 179AY. State and Territory laws operate concurrently except for superseded State Acts under s 233. Certain recapitalisation and transfer acquisitions are authorised for Competition and Consumer Act 2010 purposes under ss 179AZB, 230AM. The Act applies alongside the Corporations Act Chapter 5 for external administration under s 179B and winding up under s 182, subject to statutory fund asset priority under s 187. It prevails over inconsistent Corporations Act provisions in specified respects under s 251AA. Competition law authorisations apply to recapitalisation and transfers under ss 179A, 179AZB. State and Territory laws are not excluded except superseded State Acts under s 233. Unclaimed money provisions interact with the Freedom of Information Act 1982 and Retirement Savings Accounts Act 1997 exclusions under s 216. Tax exempt annuities and structured settlement payments are non assignable except under the Income Tax Assessment Act 1997 under ss 203C to 203D.

No recent changes are recorded in the source notes.

No court challenges or controversies are recorded in the source notes.

Non compliant transactions over statutory fund assets are ineffective except for prescribed classes or where the court declares them effective on good faith application under ss 41 to 41A. Directors remain liable for losses caused by Part 4 contraventions even after ceasing office if the company is wound up under s 188. APRA directions are not grounds for denying contractual obligations under s 230C and s 179AX. Friendly society benefit fund rules form part of the constitution and have contractual effect under ss 16O, 16Z. Investment in subsidiaries is prohibited unless at least half the total investment comes from statutory funds under s 43A. Reinsurance between statutory funds is prohibited under s 39. Assignment is ineffective without registration, dating and countersignature by the principal executive officer or delegate under s 200(2) to (2A). Equitable assignments remain possible outside the section under s 200(8). Mortgages and trusts must be created separately from the memorandum of transfer under s 201. Express written notice of a trust or equity prevents reliance on ss 200 and 201 under s 202(2). Statutory fund assets apply first to fund liabilities before other claims under s 187. Directions do not of themselves permit denial of contractual obligations under ss 230C, 179AH. Existing companies registered under the Life Insurance Act 1945 are deemed registered under this Act under s 254.

Register with APRA before issuing life policies under s 17 and s 21. Establish and maintain statutory funds with proper records by class, category and subcategory under ss 31, 75 to 76. Obtain appointed actuary advice before apportionments or distributions under ss 80, 62. Notify APRA of proposed external administrator appointments at least one week in advance under s 179C. Comply with prudential standards and APRA directions under ss 230A, 230AAA, 230B. Use approved forms for assignments and maintain policy registers under ss 200, 226. For friendly societies, obtain APRA approval for benefit fund rules and amendments under ss 16L, 16Q. Maintain segregated statutory funds with equitable apportionment and fair value transfers under ss 31, 34 to 36, 45. Appoint eligible auditors and actuaries meeting prudential standards under ss 83, 93 and ensure their reporting access under ss 88B, 98B. Implement systems for immediate APRA breach notification under s 132A and annual unclaimed money statements under s 216(1). Use only ASIC approved memorandum of transfer forms for assignments and register promptly under s 200. Obtain court confirmation for any transfer or amalgamation scheme after APRA lodgement and policy owner notification under ss 190 to 191. Comply with all APRA prudential standards and directions, including recapitalisation where required under ss 230A, 230AB, 230B. Retain records in Australia or approved locations in convertible English form under s 76A.