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Supervision and Control Principal Legislation Australia has extensive insurance legislation, including at state and territory level. Amongst the most important acts are the following:
Supervision Insurance company regulation takes place jointly through the Australian Prudential Regulatory Authority (APRA) and the Australian Securities and Investment Commission (ASIC). The non-life insurance association is the Insurance Council of Australia (ICA), whilst the main association for life and financial service providers is the Investment and Financial Services Association (IFSA). Admitted / Non-admitted There is no prohibition against unauthorised foreign insurers writing Australian business from abroad, provided they are approached directly by the policyholder or do so through an appropriately authorised Australian intermediary. Compulsory Insurance
State Involvement The federal government owns the Export Finance and Insurance Corporation (EFIC) and there are 15 other public sector insurers mainly owned by individual states and territories. Tariff Classes
Premium Taxes and Charges State governments collect revenue from the insurance industry in the form of stamp duties and fire brigade levies, which vary from state to state and from year to year. Policy Language English Non-Life (P&C) Insurance Market The non-life market is divided between public and private sector companies. Most public sector companies only write compulsory third party or workers' compensation business. As a result of recent mergers and acquisitions, the private sector market is increasingly dominated by five insurance companies/groups. Life Insurance Market Superannuation cover is expanding and compulsory superannuation benefit is now enjoyed by over 90% of full-time employees. Individual risk premiums are increasing but the individual savings market is in long-term decline faced by competition from mutual funds and unit trusts. Total life written premiums amounted to AUD 34.15 bn in 2004-05. Reinsurance Market Australia has 11 non-life professional reinsurers, which wrote gross premiums of AUD 2.21 bn in the year ending 30 June 2005. All reinsurers are of multinational parentage apart from a captive reinsurer owned by a leading domestic insurance group. Australia has a strong and developed life reinsurance market supplied by five major US and European professional reinsurers. Distribution Channels In the non-life market, personal lines insurance is mainly sold direct and commercial lines through brokers. There is some bancassurance and business handled by agents. In the life sector, Australia is in the process of evolving from an agency distribution market to a market dominated by independent financial advisors and bancassurers. Natural Hazards Parts of Australia have a moderately high earthquake exposure arising from intra-plate or continental convulsions. In addition to earthquake, the shores of east and north Australia are also exposed to tsunami. Windstorm and the associated effects of rain and hail have been the most destructive perils in Australia. Windstorms come in two varieties - tropical cyclones in the north of the continent and thunderstorms elsewhere. Flooding arises from coastal and inland rivers. Bushfire exposure is gradually increasing. |
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