This Act is Australia’s primary law governing life insurers: it defines which products count as life insurance, requires life companies (including branches of foreign insurers and friendly societies) to be registered and to ring‑fence premiums in statutory funds, and places them under APRA/ASIC supervision.
It matters to policyholders because it protects premiums, enforces financial safety and disclosure, gives regulators emergency powers, and requires court‑supervised transfers so your cover is more secure.
The Life Insurance Act 1995 protects owners and prospective owners of life policies while promoting financial system stability and a viable, competitive industry under s 3(1) and s 3(1A). It restricts life insurance business to registered companies, imposes prudential management of statutory funds including solvency and capital adequacy requirements, provides APRA and ASIC supervision, enables APRA to manage threats to obligations, protects policy owner interests in winding up, and supervises transfers and amalgamations by court order under s 3(2). The Act applies to all life companies with special provisions for friendly societies under s 3(3) and limited application to eligible foreign life insurance companies under ss 16ZD to 16ZG. Part 7 Division 4 (ss 152 to 156) authorises execution of warrants, equipment use for record examination, electronic access and seizure, compensation for damage and provision of seized item copies. Part 8 Division 1 (ss 157 to 179A) enables court ordered judicial management of life companies or business parts on APRA or company application. Part 8 Division 1AA (ss 179AA to 179AZB) permits APRA to assume statutory management or appoint administrators on solvency or stability grounds. Part 8 Division 1A (ss 179B to 179C) applies alongside Corporations Act Chapter 5 with pre appointment notice to APRA. Part 8 Division 2 (ss 180 to 188) governs winding up, limiting voluntary winding up to qualifying friendly societies and requiring court orders on APRA application. Part 9 (ss 189 to 197) mandates court confirmed schemes for transfers and amalgamations. Part 10A (ss 230A to 231H) empowers APRA to determine prudential standards and issue directions, including recapitalisation. Part 11 (ss 233 to 253) covers miscellaneous matters including injunctions, reviewable decisions and disqualification. Section 216 requires annual reporting and payment of unclaimed money to the Commonwealth. Section 200 regulates legal assignment by memorandum of transfer. Sections 88B and 98B enable APRA compulsion of auditor and actuary information. Sections 29 to 47 and 74 to 81 establish statutory fund maintenance, asset segregation and financial record obligations.
Current sections
Direct links to the current provisions in Life Insurance Act 1995.
399
Part 1
Preliminary
Part 1—Preliminary
1
Short title
1 Short title
This Act may be cited as the Life Insurance Act 1995.
2
Commencement
2 Commencement
(1) Subject to subsection (2), this Act commences on a day to be fixed by Proclamation.
(2) If this Act does not commence under subsection (1) within the period of 6 months beginning on the day on which this Act receives the Royal Assent, it commences on the first day after the end of that period.
3
Objects of Act
3 Objects of Act
(1) The main objects of this Act are:
(a) to protect the interests of the owners and prospective owners of life insurance policies in a manner consistent with the continued development of a viable, competitive and innovative life insurance industry; and
(b) to promote financial system stability in Australia.
(1A) An additional object of this Act is to protect the interests of persons entitled to other kinds of benefits provided in the course of carrying on life insurance business (including business that is declared to be life insurance business).
(2) The principal means adopted for the achievement of these objects are the following:
(a) restricting the conduct of life insurance business to companies that are able to meet certain requirements as to suitability;
(b) imposing on life companies requirements designed to promote prudent management of the life insurance business of such companies, including requirements designed to ensure the solvency and capital adequacy of statutory funds;
(c) providing for the supervision of life companies by APRA and ASIC;
(d) providing for APRA to manage or respond to circumstances in which the ability of a life company to meet its obligations may be threatened;
(e) making provision to ensure that, in the winding‑up of a life company, the interests of policy owners are adequately protected;
(f) providing for the supervision of transfers and amalgamations of life insurance business by the Court.
(3) Generally, this Act achieves these objects by provisions applying to all life companies. However, there are a number of special provisions that apply only to friendly societies (see in particular Part 2A).
4
Additional operation of Act
4 Additional operation of Act
(1) Without prejudice to its effect apart from this subsection, this Act also has the effect it would have if each reference to a company were, by express provision, confined to a company that is a corporation to which paragraph 51(xx) of the Constitution applies.
(2) Without prejudice to its effect apart from this subsection, this Act also has the effect it would have if each reference to a subsidiary of a life company were, by express provision, confined to such a subsidiary that:
(a) is a corporation to which paragraph 51(xx) of the Constitution applies; or
(b) carries on banking with respect to which the Parliament has the power to make laws under paragraph 51(xiii) of the Constitution.
(3) Without prejudice to its effect apart from this subsection, this Act also has the effect it would have if each reference to a subsidiary of a registered NOHC were, by express provision, confined to such a subsidiary that:
(a) is a corporation to which paragraph 51(xx) of the Constitution applies; or
(b) carries on banking with respect to which the Parliament has the power to make laws under paragraph 51(xiii) of the Constitution.
(4) Without prejudice to its effect apart from this subsection, this Act also has the effect it would have if each reference to a holding company of a life company were, by express provision, confined to such a holding company that:
(a) is a corporation to which paragraph 51(xx) of the Constitution applies; or
(b) carries on banking with respect to which the Parliament has the power to make laws under paragraph 51(xiii) of the Constitution.
5
Exclusion of certain State insurance
5 Exclusion of certain State insurance
This Act does not apply with respect to State insurance that does not extend beyond the limits of the State concerned.
6
Extension of Act to Norfolk Island
6 Extension of Act to Norfolk Island
This Act extends to the Territory of Norfolk Island.
7
General administration of Act
7 General administration of Act
(1) Subject to subsection (3):
(a) APRA has the general administration of:
(i) Parts 3 to 6; and
(ii) Parts 8 to 9; and
(iii) sections 206 to 210; and
(iiia) Part 10A; and
(iv) Part 12; and
(b) ASIC has the general administration of Part 10 (other than sections 206 to 210).
(2) Parts 1 to 2, 7 and 11 confer powers and duties on APRA for the purposes of APRA’s administration of its provisions and powers and duties on ASIC for the purposes of its administration of its provisions.
Note: Generally neither APRA nor ASIC is referred to in these provisions. Regulator is used instead. See the definition of Regulator in the Dictionary in Schedule 1.
(3) The Minister may give APRA or ASIC directions about the performance or exercise of its functions or powers under this Act.
7A
Determination that certain provisions do not apply
7A Determination that certain provisions do not apply
(1) APRA may, in writing, determine that any or all of the following provisions of this Act do not apply to a person while the determination is in force:
(a) a provision of Part 2, 2A, 2B or 3;
(b) a provision of Division 1, 3, 4, 5 or 6 of Part 4;
(c) section 75;
(d) section 76;
(e) section 78;
(f) section 79;
(g) section 80;
(h) section 81;
(j) section 230AAA.
(2) The determination:
(a) may be expressed to apply to a particular person or to a class of persons; and
(b) may specify the period during which the determination is in force; and
(c) may be made subject to specified conditions.
(3) If APRA makes a determination that applies to a particular person, APRA must also give the person written notice of the determination.
(4) APRA may, in writing, vary or revoke a determination under this section.
(5) The following instruments made under this section are not legislative instruments:
(a) a determination that applies to a particular person;
(b) an instrument varying or revoking a determination that applies to a particular person.
(6) Otherwise, an instrument made under this section is a legislative instrument.
7B
Breach of condition of a determination under section 7A
7B Breach of condition of a determination under section 7A
(1) A person commits an offence if:
(a) a determination under section 7A applies to a person; and
(b) the person does or fails to do an act; and
(c) doing or failing to do the act results in a breach of a condition to which the determination is subject.
Penalty: 60 penalty units.
(2) Strict liability applies to subsection (1).
Note: For strict liability, see section 6.1 of the Criminal Code.
8
Dictionary
8 Dictionary
(1) A dictionary of expressions used in the Act is contained in Schedule 1.
(2) Unless the contrary intention appears, an expression defined in the dictionary has the meaning there set out.
8A
Approved manner and form of applications and notices
8A Approved manner and form of applications and notices
(1) This section applies in relation to making an application or giving a notice if another provision of this Act refers to making the application or giving the notice in accordance with this section.
(2) The application is made, or the notice is given, in accordance with this section if the application or notice:
(a) is made or given:
(i) if APRA has approved a manner for making the application or giving the notice under subsection (3)—in the approved manner; or
(ii) otherwise—in writing; and
(b) if APRA has approved a form for making the application or giving the notice under subsection (3):
(i) is made or given in the approved form; and
(ii) includes the information required by the form; and
(iii) is accompanied by the documents (if any) required by the form; and
(c) includes the information (if any) prescribed by regulations made for the purposes of this paragraph in relation to the application or notice; and
(d) is accompanied by the documents (if any) prescribed by regulations made for the purposes of this paragraph in relation to the application or notice.
(3) For the purposes of paragraph (2)(a) or (b), APRA may, in writing, approve a manner or form for making the application or giving the notice.
(4) Without limiting subsection (3), a form approved under that subsection may be:
(a) the form of a statutory declaration; or
(b) a form that requires a matter to be verified by a statutory declaration.
Part 2
Explanation of key concepts
Part 2—Explanation of key concepts
9
Life policy
9 Life policy
(1) Subject to subsection (2), each of the following constitutes a life policy for the purposes of this Act:
(a) a contract of insurance that provides for the payment of money on the death of a person or on the happening of a contingency dependent on the termination or continuance of human life;
(b) a contract of insurance that is subject to payment of premiums for a term dependent on the termination or continuance of human life;
(c) a contract of insurance that provides for the payment of an annuity for a term dependent on the continuance of human life;
(d) a contract that provides for the payment of an annuity for a term not dependent on the continuance of human life but exceeding the term prescribed by the regulations for the purposes of this paragraph;
(e) a continuous disability policy;
(f) a contract (whether or not it is a contract of insurance) that constitutes an investment account contract;
(g) a contract (whether or not it is a contract of insurance) that constitutes an investment‑linked contract.
(2) A contract that provides for the payment of money on the death of a person is not a life policy if:
(a) by the terms of the contract, the duration of the contract is to be not more than one year; and
(b) payment is only to be made in the event of:
(i) death by accident; or
(ii) death resulting from a specified sickness.
9A
Continuous disability policy
9A Continuous disability policy
(1) Subject to this section, a continuous disability policy is a contract of insurance:
(a) that is, by its terms, to be of more than 3 years’ duration; and
(b) under which a benefit is payable in the event of:
(i) the death, by accident or by some other cause stated in the contract, of the person whose life is insured (the insured); or
(ii) injury to, or disability of, the insured as a result of accident or sickness; or
(iii) the insured being found to have a stated condition or disease.
(2) A contract of insurance that is, by its terms, to be of a duration of not more than 3 years is taken to comply with paragraph (1)(a) if:
(a) contracts of insurance of the same kind as the contract are usually of more than 3 years’ duration; and
(b) the contract is of a lesser duration only because of the age of the owner of the policy at the time when it was entered into.
(3) A contract of insurance is not a continuous disability policy if the terms of the contract permit alteration, at the instance of the life company concerned, of the benefits provided for by the contract or the premiums payable under the contract.
(4) A contract of insurance the terms of which permit alteration, at the instance of the life company concerned, of the benefits provided for by the contract is not thereby excluded by subsection (3) from being a continuous disability policy if, by those terms, the only alterations that are permitted to be made are alterations that improve the benefits and are made following an offer made by the life company and accepted by the owner of the policy.
(5) A contract of insurance the terms of which permit alteration, at the instance of the life company concerned, of the premiums payable under the contract is not thereby excluded by subsection (3) from being a continuous disability policy if the terms of all contracts of the same kind as the contract only permit such alterations if they are made on a simultaneous and consistent basis.
(6) A contract of consumer credit insurance within the meaning of the Insurance Contracts Act 1984 is not a continuous disability policy.
(7) A contract of insurance entered into in the course of carrying on health insurance business is not a continuous disability policy.
10
Issue and ownership of policies
10 Issue and ownership of policies
(1) For the purposes of this Act:
(a) a life company issues a policy when the company enters into the contract that constitutes the policy; and
(b) a policy is issued to the person with whom the life company enters into the contract.
(2) For the purposes of this Act, the owner of a policy is:
(a) the person to whom the policy is issued; or
(b) if the rights of that person under the policy have been assigned under this Act or transferred by the operation of the policy, the person who has those rights.
11
Life insurance business
11 Life insurance business
(1) A reference in this Act to life insurance business is a reference to:
(a) business that consists of any or all of the following:
(i) the issuing of life policies;
(ii) the issuing of sinking fund policies;
(iii) the undertaking of liability under life policies;
(iv) the undertaking of liability under sinking fund policies; and
(b) any business that relates to business referred to in paragraph (a).
Note: Declarations under sections 12A and 12B have the effect of extending the kinds of business that are life insurance business for the purposes of this Act.
(2) In order to avoid doubt and without limiting paragraph (1)(b), it is declared that the reference in that paragraph to business that relates to business referred to in paragraph (1)(a) includes business relating to the investment, administration and management of the assets of a statutory fund.
(3) For the purposes of this Act, the following do not constitute life insurance business:
(a) business in relation to benefits provided by a trade union for its members or their dependants;
(b) business in relation to the benefits provided for its members or their dependants by an association of employees that is registered as an organisation, or recognised, under the Fair Work (Registered Organisations) Act 2009;
(c) business in relation to any scheme or arrangement under which superannuation benefits, pensions or payments to employees or their dependants (and not to any other persons) on retirement, disability or death are provided by an employer or by employees, or by both, wholly through an organisation established by the employer or employees or by both;
(d) in the case of a person who issues policies to his or her employees, and not to any other persons, in Australia, the business that consists of the issue of those policies or the undertaking of liability under those policies;
(e) business in relation to a scheme or arrangement for the provision, by a person other than a life company, of benefits consisting of:
(i) the provision of funeral, burial or cremation services, with or without the supply of goods connected with such services; or
(ii) the payment of money, on the death of a person, for the purpose of meeting the whole or a part of the expenses of and incidental to the funeral, burial or cremation of the person;
and no other benefits, except benefits incidental to the scheme or arrangement.
Note: This subsection has effect subject to sections 12A and 12B (under which certain business may be declared to be life insurance business for the purposes of this Act).
12
Classes of life insurance business
12 Classes of life insurance business
(1) For the purposes of this Act, the following are the classes of life insurance business:
(a) ordinary business;
(b) superannuation business.
The expressions “ordinary business” and “superannuation business” are defined in the Dictionary.
(2) APRA may, at the request of a life company, declare, in writing, that life insurance business carried on by the life company and included in one class of life insurance business is to be treated, for the purposes of this Act, as if it were included in the other class of life insurance business.
(3) If APRA makes a declaration:
(a) this Act has effect accordingly; and
(b) APRA must give a copy of the declaration to the life company at whose request the declaration was made.
12A
Declarations that insurance or annuity business is life insurance business
12A Declarations that insurance or annuity business is life insurance business
(1) APRA may, on the application of a company, declare, in writing, that insurance business (other than health insurance business or business of insurance against loss of, or damage to, property) or business relating to the payment of annuities:
(a) that is carried on by the company; or
(b) that the company proposes to carry on;
is to be treated, for the purposes of this Act, as if it were life insurance business.
(2) The application must comply with any applicable requirements in the prudential standards.
(3) APRA must only make the declaration if it is satisfied that:
(a) the company is a life company; or
(b) the company is not currently a life company, but the only business it proposes to carry on if the declaration is made is:
(i) the business in respect of which the declaration is sought; or
(ii) that business and other business that will be, or is likely to be declared to be, life insurance business.
(4) In deciding whether to make the declaration, APRA may also have regard to the following matters:
(a) whether the business in respect of which the declaration is sought is similar in nature to other life insurance business;
(b) whether it would be appropriate for the business to be regulated under this Act;
(c) whether it would be more appropriate for the business to be regulated under some other law (for example, the Insurance Act 1973);
(d) the tax treatment of benefits provided in the course of the business;
(e) if the company is not registered under section 21—whether the company would be able to be registered under section 21;
(f) any other matter that APRA considers is relevant.
(5) The declaration must also state the class of life insurance business in which the business is to be treated as being included.
(6) If APRA makes a declaration:
(a) this Act has effect accordingly; and
(b) APRA must give a copy of the declaration to the company.
12B
Declarations that other financial business is life insurance business
12B Declarations that other financial business is life insurance business
(1) This section applies to business consisting of the provision of eligible financial benefits. For this purpose, an eligible financial benefit is a benefit in relation to which the following conditions are satisfied:
(a) the benefit is to be provided by a company to a person in accordance with a contract;
(b) the person’s entitlement to the benefit is conditional on amounts being paid in accordance with the contract;
(c) the benefit is an amount of money (and is not, for example, the provision of a service or facility);
(d) the benefit is not an excluded benefit under any of the following subparagraphs:
(i) the benefit is an excluded benefit if the contract is entered into in the course of banking business, as defined in section 5 of the Banking Act 1959, carried on by the company;
(ii) the benefit is an excluded benefit if the right to the benefit constitutes an interest in a registered scheme, as defined in section 9 of the Corporations Act 2001;
(iii) the benefit is an excluded benefit if the right to the benefit constitutes an interest in a regulated superannuation fund, an approved deposit fund, a pooled superannuation trust or a public sector superannuation scheme, as defined in section 10 of the Superannuation Industry (Supervision) Act 1993;
(iv) the benefit is an excluded benefit if it is provided under a contract of insurance entered into in the course of carrying on health insurance business;
(v) the benefit is an excluded benefit if it is a benefit of a kind specified in regulations for the purposes of this subparagraph.
(2) APRA may, on the application of a company, declare, in writing, that business:
(a) that:
(i) is carried on by the company; and
(ii) is business to which this section applies; or
(b) that:
(i) the company proposes to carry on; and
(ii) will, when it is carried on, be business to which this section applies;
is to be treated, for the purposes of this Act, as if it were life insurance business.
(3) The application must comply with any applicable requirements in the prudential standards.
(4) APRA must only make the declaration if it is satisfied that:
(a) the company is a life company; or
(b) the company is not currently a life company, but the only business it proposes to carry on if the declaration is made is:
(i) the business in respect of which the declaration is sought; or
(ii) that business and other business that will be, or is likely to be declared to be, life insurance business.
(5) In deciding whether to make the declaration, APRA may also have regard to the following matters:
(a) whether the business in respect of which the declaration is sought is similar in nature to other life insurance business;
(b) whether it would be appropriate for the business to be regulated under this Act;
(c) whether it would be more appropriate for the business to be regulated under some other law (for example, Chapter 5C of the Corporations Act 2001);
(d) the tax treatment of benefits provided in the course of the business;
(e) if the company is not registered under section 21—whether the company would be able to be registered under section 21;
(f) any other matter that APRA considers is relevant.
(6) The declaration must also state the class of life insurance business in which the business is to be treated as being included.
(7) If APRA makes a declaration:
(a) this Act has effect accordingly; and
(b) APRA must give a copy of the declaration to the company.
13
Business of a statutory fund
13 Business of a statutory fund
(1) A reference in this Act to the business of a statutory fund of a life company is a reference to the life insurance business to which the fund relates.
(2) For the purposes of this Act:
(a) a liability (including a policy liability) is taken to be referable to the business of a statutory fund if the liability is of a kind that, under Part 4, may be discharged out of the assets of the fund; and
(b) an expense is taken to be referable to the business of a statutory fund if the expense is of a kind that, under Part 4, may be met out of the assets of the fund.
(1) In this Act:
(a) the expression “investment account benefits” refers to benefits payable under an investment account contract; and
(b) the expression “investment‑linked benefits” refers to benefits payable under an investment‑linked contract.
(2) An investment account contract is a contract that:
(a) provides for benefits to be paid:
(i) on death; or
(ii) on a specified date or specified dates or on death before the specified date, or the last of the specified dates, as the case may be; and
(b) provides for the benefits to be calculated by reference to:
(i) a running account under the contract; or
(ii) units the value of which are guaranteed by the contract not to be reduced; and
(c) provides for the account to be increased (for example, by the amounts of premiums paid or interest payable).
(3) In spite of subsection (2), a contract is not an investment account contract if it provides for the account to be reduced otherwise than by the amounts of withdrawals by the person responsible for the payment of premiums or by the amounts of charges payable under the contract.
(4) An investment‑linked contract is a contract:
(a) the principal object of which is the provision of benefits calculated by reference to units the value of which is related to the market value of a specified class or group of assets of the party by whom the benefits are to be provided; and
(b) that provides for benefits to be paid:
(i) on death; or
(ii) on a specified date or specified dates or on death before the specified date, or the last of the specified dates, as the case may be.
(5) APRA, at the request of a life company, may make a written declaration:
(a) that contracts of a kind specified in the declaration and entered into by the company are, or would be, investment account contracts; or
(b) that contracts of a kind specified in the declaration and entered into by the company are, or would be, investment‑linked contracts.
(6) If APRA makes a declaration:
(a) this Act has effect accordingly; and
(b) APRA must give a copy of the declaration to the life company at whose request the declaration was made.
15
Participating, non‑participating benefits
15 Participating, non‑participating benefits
(1) Subject to this section, a participating benefit is any benefit other than a non‑participating benefit.
(2) Subject to this section, a non‑participating benefit is a benefit that has the following features:
(a) the benefit does not include any entitlement to share in any distribution by the life company of profits or surplus;
(b) the amount of the benefit is specified in the policy document or is to be calculated according to a formula that:
(i) is set out in the policy document; and
(ii) does not include any element that is in any way dependent on, or to be ascertained according to, a decision of the life company concerned.
(3) A benefit is a non‑participating benefit if it is declared by the prudential standards to be a non‑participating benefit.
(4) APRA, at the request of a life company, may make a written declaration:
(a) that benefits of a specified kind, when provided for by policies issued by the company, are, or would be, participating benefits; or
(b) that benefits of a specified kind, when provided for by policies issued by the company, are, or would be, non‑participating benefits.
(5) If APRA makes a declaration:
(a) this Act has effect accordingly; and
(b) APRA must give a copy of the declaration to the life company at whose request the declaration was made.
15A
Relevant group of bodies corporate
15A Relevant group of bodies corporate
For the purposes of this Act:
(a) a life company and its subsidiaries together constitute a relevant group of bodies corporate; and
(b) a registered NOHC and its subsidiaries together also constitute a relevant group of bodies corporate.
16
Related bodies corporate and subsidiaries
16 Related bodies corporate and subsidiaries
Except for the purposes of Part 7, the question whether:
(a) one body corporate is a subsidiary of another; or
(b) one body corporate is related to another;
is to be determined, in the same way as it would be determined under the Corporations Act 2001.
More sections below
Source text: opening excerpt
Sourced from the Federal Register of Legislation (legislation.gov.au), CC BY 4.0.
Part 1 Preliminary
Part 1—Preliminary
1 Short title
1 Short title
This Act may be cited as the Life Insurance Act 1995.
2 Commencement
2 Commencement
(1) Subject to subsection (2), this Act commences on a day to be fixed by Proclamation.
(2) If this Act does not commence under subsection (1) within the period of 6 months beginning on the day on which this Act receives the Royal Assent, it commences on the first day after the end of that period.
3 Objects of Act
3 Objects of Act
(1) The main objects of this Act are:
(a) to protect the interests of the owners and prospective owners of life insurance policies in a manner consistent with the continued development of a viable, competitive and innovative life insurance industry; and
(b) to promote financial system stability in Australia.
(1A) An additional object of this Act is to protect the interests of persons entitled to other kinds of benefits provided in the course of carrying on life insurance business (including business that is declared to be life insurance business).
(2) The principal means adopted for the achievement of these objects are the following:
(a) restricting the conduct of life insurance business to companies that are able to meet certain requirements as to suitability;
(b) imposing on life companies requirements designed to promote prudent management of the life insurance business of such companies, including requirements designed to ensure the solvency and capital adequacy of statutory funds;
(c) providing for the supervision of life companies by APRA and ASIC;
(d) providing for APRA to manage or respond to circumstances in which the ability of a life company to meet its obligations may be threatened;
(e) making provision to ensure that, in the winding‑up of a life company, the interests of policy owners are adequately protected;
(f) providing for the supervision of transfers and amalgamations of life insurance business by the Court.
(3) Generally, this Act achieves these objects by provisions applying to all life companies. However, there are a number of special provisions that apply only to friendly societies (see in particular Part 2A).
4 Additional operation of Act
4 Additional operation of Act
(1) Without prejudice to its effect apart from this subsection, this Act also has the effect it would have if each reference to a company were, by express provision, confined to a company that is a corporation to which paragraph 51(xx) of the Constitution applies.
(2) Without prejudice to its effect apart from this subsection, this Act also has the effect it would have if each reference to a subsidiary of a life company were, by express provision, confined to such a subsidiary that:
(a) is a corporation to which paragraph 51(xx) of the Constitution applies; or
(b) carries on banking with respect to which the Parliament has the power to make laws under paragraph 51(xiii) of the Constitution.
(3) Without prejudice to its effect apart from this subsection, this Act also has the effect it would have if each reference to a subsidiary of a registered NOHC were, by express provision, confined to such a subsidiary that:
(a) is a corporation to which paragraph 51(xx) of the Constitution applies; or
(b) carries on banking with respect to which the Parliament has the power to make laws under paragraph 51(xiii) of the Constitution.
(4) Without prejudice to its effect apart from this subsection, this Act also has the effect it would have if each reference to a holding company of a life company were, by express provision, confined to such a holding company that:
(a) is a corporation to which paragraph 51(xx) of the Constitution applies; or
(b) carries on banking with respect to which the Parliament has the power to make laws under paragraph 51(xiii) of the Constitution.
Main concepts
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.
Who it affects
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).
Key duties and rights
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).
Penalties and enforcement
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.
How it interacts with other laws
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.
Recent changes and why
No recent changes are recorded in the source notes.
Court challenges and controversies
No court challenges or controversies are recorded in the source notes.
Gotchas
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.
How to comply
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.
This Act does not apply with respect to State insurance that does not extend beyond the limits of the State concerned.
6 Extension of Act to Norfolk Island
6 Extension of Act to Norfolk Island
This Act extends to the Territory of Norfolk Island.
7 General administration of Act
7 General administration of Act
(1) Subject to subsection (3):
(a) APRA has the general administration of:
(i) Parts 3 to 6; and
(ii) Parts 8 to 9; and
(iii) sections 206 to 210; and
(iiia) Part 10A; and
(iv) Part 12; and
(b) ASIC has the general administration of Part 10 (other than sections 206 to 210).
(2) Parts 1 to 2, 7 and 11 confer powers and duties on APRA for the purposes of APRA’s administration of its provisions and powers and duties on ASIC for the purposes of its administration of its provisions.
Note: Generally neither APRA nor ASIC is referred to in these provisions. Regulator is used instead. See the definition of Regulator in the Dictionary in Schedule 1.
(3) The Minister may give APRA or ASIC directions about the performance or exercise of its functions or powers under this Act.
7A Determination that certain provisions do not apply
7A Determination that certain provisions do not apply
(1) APRA may, in writing, determine that any or all of the following provisions of this Act do not apply to a person while the determination is in force:
(a) a provision of Part 2, 2A, 2B or 3;
(b) a provision of Division 1, 3, 4, 5 or 6 of Part 4;
(c) section 75;
(d) section 76;
(e) section 78;
(f) section 79;
(g) section 80;
(h) section 81;
(j) section 230AAA.
(2) The determination:
(a) may be expressed to apply to a particular person or to a class of persons; and
(b) may specify the period during which the determination is in force; and
(c) may be made subject to specified conditions.
(3) If APRA makes a determination that applies to a particular person, APRA must also give the person written notice of the determination.
(4) APRA may, in writing, vary or revoke a determination under this section.
(5) The following instruments made under this section are not legislative instruments:
(a) a determination that applies to a particular person;
(b) an instrument varying or revoking a determination that applies to a particular person.
(6) Otherwise, an instrument made under this section is a legislative instrument.
7B Breach of condition of a determination under section 7A
7B Breach of condition of a determination under section 7A
(1) A person commits an offence if:
(a) a determination under section 7A applies to a person; and
(b) the person does or fails to do an act; and
(c) doing or failing to do the act results in a breach of a condition to which the determination is subject.
Penalty: 60 penalty units.
(2) Strict liability applies to subsection (1).
Note: For strict liability, see section 6.1 of the Criminal Code.
8 Dictionary
8 Dictionary
(1) A dictionary of expressions used in the Act is contained in Schedule 1.
(2) Unless the contrary intention appears, an expression defined in the dictionary has the meaning there set out.
8A Approved manner and form of applications and notices
8A Approved manner and form of applications and notices
(1) This section applies in relation to making an application or giving a notice if another provision of this Act refers to making the application or giving the notice in accordance with this section.
(2) The application is made, or the notice is given, in accordance with this section if the application or notice:
(a) is made or given:
(i) if APRA has approved a manner for making the application or giving the notice under subsection (3)—in the approved manner; or
(ii) otherwise—in writing; and
(b) if APRA has approved a form for making the application or giving the notice under subsection (3):
(i) is made or given in the approved form; and
(ii) includes the information required by the form; and
(iii) is accompanied by the documents (if any) required by the form; and
(c) includes the information (if any) prescribed by regulations made for the purposes of this paragraph in relation to the application or notice; and
(d) is accompanied by the documents (if any) prescribed by regulations made for the purposes of this paragraph in relation to the application or notice.
(3) For the purposes of paragraph (2)(a) or (b), APRA may, in writing, approve a manner or form for making the application or giving the notice.
(4) Without limiting subsection (3), a form approved under that subsection may be:
(a) the form of a statutory declaration; or
(b) a form that requires a matter to be verified by a statutory declaration.
Part 2 Explanation of key concepts
Part 2—Explanation of key concepts
9 Life policy
9 Life policy
(1) Subject to subsection (2), each of the following constitutes a life policy for the purposes of this Act:
(a) a contract of insurance that provides for the payment of money on the death of a person or on the happening of a contingency dependent on the termination or continuance of human life;
(b) a contract of insurance that is subject to payment of premiums for a term dependent on the termination or continuance of human life;
(c) a contract of insurance that provides for the payment of an annuity for a term dependent on the continuance of human life;
(d) a contract that provides for the payment of an annuity for a term not dependent on the continuance of human life but exceeding the term prescribed by the regulations for the purposes of this paragraph;
(e) a continuous disability policy;
(f) a contract (whether or not it is a contract of insurance) that constitutes an investment account contract;
(g) a contract (whether or not it is a contract of insurance) that constitutes an investment‑linked contract.
(2) A contract that provides for the payment of money on the death of a person is not a life policy if:
(a) by the terms of the contract, the duration of the contract is to be not more than one year; and
(b) payment is only to be made in the event of:
(i) death by accident; or
(ii) death resulting from a specified sickness.
9A Continuous disability policy
9A Continuous disability policy
(1) Subject to this section, a continuous disability policy is a contract of insurance:
(a) that is, by its terms, to be of more than 3 years’ duration; and
(b) under which a benefit is payable in the event of:
(i) the death, by accident or by some other cause stated in the contract, of the person whose life is insured (the insured); or
(ii) injury to, or disability of, the insured as a result of accident or sickness; or
(iii) the insured being found to have a stated condition or disease.
(2) A contract of insurance that is, by its terms, to be of a duration of not more than 3 years is taken to comply with paragraph (1)(a) if:
(a) contracts of insurance of the same kind as the contract are usually of more than 3 years’ duration; and
(b) the contract is of a lesser duration only because of the age of the owner of the policy at the time when it was entered into.
(3) A contract of insurance is not a continuous disability policy if the terms of the contract permit alteration, at the instance of the life company concerned, of the benefits provided for by the contract or the premiums payable under the contract.
(4) A contract of insurance the terms of which permit alteration, at the instance of the life company concerned, of the benefits provided for by the contract is not thereby excluded by subsection (3) from being a continuous disability policy if, by those terms, the only alterations that are permitted to be made are alterations that improve the benefits and are made following an offer made by the life company and accepted by the owner of the policy.
(5) A contract of insurance the terms of which permit alteration, at the instance of the life company concerned, of the premiums payable under the contract is not thereby excluded by subsection (3) from being a continuous disability policy if the terms of all contracts of the same kind as the contract only permit such alterations if they are made on a simultaneous and consistent basis.
(6) A contract of consumer credit insurance within the meaning of the Insurance Contracts Act 1984 is not a continuous disability policy.
(7) A contract of insurance entered into in the course of carrying on health insurance business is not a continuous disability policy.
10 Issue and ownership of policies
10 Issue and ownership of policies
(1) For the purposes of this Act:
(a) a life company issues a policy when the company enters into the contract that constitutes the policy; and
(b) a policy is issued to the person with whom the life company enters into the contract.
(2) For the purposes of this Act, the owner of a policy is:
(a) the person to whom the policy is issued; or
(b) if the rights of that person under the policy have been assigned under this Act or transferred by the operation of the policy, the person who has those rights.
11 Life insurance business
11 Life insurance business
(1) A reference in this Act to life insurance business is a reference to:
(a) business that consists of any or all of the following:
(i) the issuing of life policies;
(ii) the issuing of sinking fund policies;
(iii) the undertaking of liability under life policies;
(iv) the undertaking of liability under sinking fund policies; and
(b) any business that relates to business referred to in paragraph (a).
Note: Declarations under sections 12A and 12B have the effect of extending the kinds of business that are life insurance business for the purposes of this Act.
(2) In order to avoid doubt and without limiting paragraph (1)(b), it is declared that the reference in that paragraph to business that relates to business referred to in paragraph (1)(a) includes business relating to the investment, administration and management of the assets of a statutory fund.
(3) For the purposes of this Act, the following do not constitute life insurance business:
(a) business in relation to benefits provided by a trade union for its members or their dependants;
(b) business in relation to the benefits provided for its members or their dependants by an association of employees that is registered as an organisation, or recognised, under the Fair Work (Registered Organisations) Act 2009;
(c) business in relation to any scheme or arrangement under which superannuation benefits, pensions or payments to employees or their dependants (and not to any other persons) on retirement, disability or death are provided by an employer or by employees, or by both, wholly through an organisation established by the employer or employees or by both;
(d) in the case of a person who issues policies to his or her employees, and not to any other persons, in Australia, the business that consists of the issue of those policies or the undertaking of liability under those policies;
(e) business in relation to a scheme or arrangement for the provision, by a person other than a life company, of benefits consisting of:
(i) the provision of funeral, burial or cremation services, with or without the supply of goods connected with such services; or
(ii) the payment of money, on the death of a person, for the purpose of meeting the whole or a part of the expenses of and incidental to the funeral, burial or cremation of the person;
and no other benefits, except benefits incidental to the scheme or arrangement.
Note: This subsection has effect subject to sections 12A and 12B (under which certain business may be declared to be life insurance business for
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