CTP Insurer Standard Licence Conditions

Disclaimer: The licence conditions detailed in this document are an example of standard licence conditions imposed on CTP insurers licenced to issue third-party policies under the Motor Accident Injuries Act 2017 and as required under Divisions 9.1 and 9.2 of the Act. However, the actual licence agreement between the Authority and the individual CTP insurer may contain additional ‘special licence conditions’ not described in this sample document.

Licence conditions at [date]

[CTP Insurer Business Name/Trading Name]

1. Definitions

Act means the Motor Accident Injuries Act 2017.

Appointed Actuary means an actuary appointed under section 39(1)(b) of the Insurance Act 1973 (Cth).

Appointed Auditor means an auditor appointed under section 39(1)(a) of the Insurance Act 1973 (Cth).

APRA means the Australian Prudential Regulation Authority established under the Australian Prudential Regulation Authority Act 1998 (Cth).

Authority means the State Insurance Regulatory Authority constituted under the State Insurance and Care Governance Act 2015 and any body constituted under an Act of the State of New South Wales which is a successor to the functions of the State Insurance Regulatory Authority under the Act.

Business plan means a business plan prepared under section 9.18 of the Act.

Business Rules Deed means a deed in respect of the Scheme executed by the Roads and Maritime Services (constituted under the Transport Administration Act 1988) and designated by the Authority as the Business Rules Deed for the purposes of conditions of licences under Division 9.1 of the Act, as amended or replaced.

Information Commissioner has the meaning given in the Australian Information Commissioner Act 2010 (Cth).

Insurance Act means the Insurance Act 1973 (Cth).

Licensee means the entity to which this licence is granted.

Privacy Act means the Privacy Act 1988 (Cth).

Privacy Commissioner has the meaning given in the Health Records and Information Privacy Act 2002.

Privacy Laws means the Health Records and Information Privacy Act 2002 and the Privacy Act and includes any State or Commonwealth legislation which replaces either of those Acts.

Prudential Standards means the prudential standards determined by APRA under the Insurance Act 1973 (Cth), as amended or replaced.

Related bodies corporate has the meaning given in section 50 of the Corporations Act 2001 (Cth).

Scheme means the scheme of compulsory third-party insurance and provision of benefits and support under the Act.

Security interest means a mortgage, charge, lien, pledge or other encumbrance and includes, without limitation, a security interest as defined under section 12 of the Personal Property Securities Act 2009 (Cth).

Third-party insurance business has the meaning given in section 9.18(7) of the Act.

Third-party policy has the meaning given in the Act.

2. License conditions imposed by statute

1. The Licensee must comply with the conditions of the licence prescribed by the Act and any regulations made under the Act.

3. General licence conditions

2. (Standard of conduct) The Licensee must do all things necessary to ensure that its third- party insurance business is conducted efficiently, honestly, fairly and in accordance with SIRA’s Customer Service Conduct Principles as published on the SIRA website from time to time.

3. (Claims handling)

• (a) The Licensee must not without prior written consent of the Authority permit or authorise another person to exercise its responsibility for determination or resolution of claims, whether by way of assignment, transfer, agency agreement, binder, or any other arrangement.
• (b) When seeking the Authority's consent under condition 3(a), the Licensee must provide confirmation of, and a copy of the relevant procedures in place to ensure, compliance in respect of claims handling with the requirements of:
  • (i) applicable Privacy Laws; and
  • (ii) the Act as to the provision of data to the Authority.

4. (Business plan)

• (a) The Licensee must deliver to the Authority a copy of its current business plan on or before the 28 February of each calendar year.
• (b) The business plan delivered to the Authority as required in condition 4(a) must include, as an appendix, a letter from the Board of directors of the Licensee to the Authority (whether signed by the directors, or on behalf of the directors by an officer authorised to sign on their behalf) confirming present and continuing compliance with APRA's Prudential Standard CPS 232 or, if replaced, with the APRA prudential standard addressing business continuity management by authorised general insurers, including the development and maintenance of a business continuity plan.
• (c) If the Licensee operates more than one third-party insurance business (e.g., the Licensee issues third-party policies under multiple different brands), then the Licensee may prepare and deliver a single business plan (provided that the single business plan indicates clearly any differences between the Licensee's practices or plans in respect of separate third-party insurance businesses) or separate business plans for separate third-party insurance businesses.
• (d) Before implementing any significant change to the conduct of its third-party insurance business (including, but not limited to, strategy in respect of claims handling, pricing or product distribution), the Licensee must deliver to the Authority a copy of its revised business plan.

5. (Security interests) The Licensee must immediately advise the Authority in writing of the existence or creation, and full details, of any security interest in or over its assets which affects, or which has the potential to affect, the Licensee's ability to meet its insurance obligations.

6. (Returns and correspondence) The Licensee must ensure that the Authority receives:

• (a) within 10 working days of delivery to APRA (or any agent, adviser, representative or delegate of APRA), copies of the following documents (within the meaning of the Prudential Standards to which the Licensee is subject, where applicable and unless otherwise indicated):
  • (i) quarterly and annual information provided to APRA under the Financial Sector (Collection of Data) Act 2001 (Cth) and the reporting standards made under that Act; and
  • (ii) certificates and reports required to be prepared by the Licensee's Appointed Auditor and Appointed Actuary and provided to APRA;
  • (iii) business plan (in whole or in part) to the extent that it is material to or may affect the Licensee's third-party insurance business;
  • (iv) Appointed Actuary Financial Condition Report (in whole or in part) to the extent that it relates to the Licensee's third-party insurance business;
  • (v) risk appetite statement (in whole or in part) to the extent that it relates to the Licensee's third-party insurance business;
  • (vi) risk management strategy (in whole or in part) to the extent that it is material to or may affect the Licensee's third-party insurance business;
  • (vii) reinsurance management strategy (in whole or in part) to the extent that it is material to or may affect the Licensee's third-party insurance business;
  • (viii) reinsurance arrangements statement (in whole or in part) to the extent that it relates to the Licensee's third-party insurance business;
  • (ix) Internal Capital Adequacy Assessment Process (ICAAP) summary statement;
  • (x) ICAAP report;
  • (xi) Insurance Liability Valuation Report (ILVR) (in whole or in part) to the extent that it relates to the Licensee's third-party insurance business;
  • (xii) any reports issued by the Board Risk Committee (in whole or in part) to the extent that they relate to the Licensee's third-party insurance business;
  • (xiii) any responses by management or the board of the Licensee to a finding, review or report by APRA into prudential matters affecting the Licensee; and
  • (xiv) any other documents relevant to assessment of the adequacy of the level and quality of capital held by the Licensee to meet its insurance obligations under third-party policies.
• (b) within 10 working days of receipt, copies of all correspondence (including, without limitation, findings, reviews, reports, notices, demands and requests) sent from or on behalf of APRA to the Licensee (or any agent, adviser, representative or delegate of the Licensee) which is material to the Licensee's third-party insurance business. Without limiting this condition 6(b), correspondence which is material to the Licensee's third-party insurance business is taken to include any:
  • (i) notice served on the Licensee or a related body corporate by APRA under section 52 of the Insurance Act;
  • (ii) direction given to the Licensee by APRA under section 103B of the Insurance Act;
  • (iii) direction given to the Licensee or a related body corporate by APRA under section 104 of the Insurance Act; or
  • (iv) infringement notice served on the Licensee by APRA under section 19 of the Financial Sector (Collection of Data) Act 2001 (Cth).
• (c) as soon as practicable upon request by the Authority, copies of any reports, accounts, statements, certificates, returns, correspondence (including, without limitation, submissions, notices, demands and requests) that have passed between the Licensee and APRA.

7. (Third-party insurance business data)

• (a) If requested by the Authority in a notice issued under this condition 7, the Licensee must give to the Authority data, reports and information relating to the Licensee's third-party insurance business that are in the possession, custody or control of the Licensee:
  • (i) as specified in the notice or any subsequent updates to the notice issued by the Authority; and
  • (ii) at such intervals as may be specified in the notice, and otherwise when required by the notice, or any subsequent updates to the notice issued by the Authority.
• (b) If the Licensee becomes aware (whether in correspondence with the Authority or otherwise) that data, reports or information given to the Authority under condition 7(a) was not complete, accurate and up-to-date on the date it was so given, the Licensee must:
  • (i) immediately notify the Authority; and
  • (ii) provide complete, accurate and up-to-date data, reports or information within 7 days of becoming so aware or within such other time period specified by the Authority for the purposes of this condition 7(b).
• (c) A notice issued under this condition 7 (or any subsequent update to the notice issued by the Authority) may specify intervals ongoing for an indefinite period.
• (d) More than one notice may be in force under this condition 7 at any one time.

8. (Letter of Authority) The Licensee must, immediately upon the grant of this licence, provide to the Authority a letter authorising APRA to release to the Authority information pertaining to the Licensee.

9. (Related bodies corporate) The Licensee must give to the Authority, promptly when requested by the Authority:

• (a) information about the ownership of each of its related bodies corporate; and
• (b) an explanation of the business activities of each of its related bodies corporate.

10. (Compliance with laws) The Licensee must establish and maintain compliance measures to ensure that it complies at all times with its obligations under the Act and the regulations and guidelines made under it.

11. (Re-insurance arrangements) In relation to any arrangement for re-insurance in respect of liabilities under third-party policies issued by the Licensee (re-insurance arrangement), the Licensee must:

• (a) not make allowance for additional costs (including without limitation expenses, brokerage and net re-insurance cost) related to the re-insurance arrangement in the Licensee's premium filings;
• (b) with each premium filing, provide written confirmation of compliance with condition 11(a);
• (c) advise the Authority immediately of any material variations to the re-insurance arrangement to the extent that they may impact the financial position of the Licensee; and
• (d) together with the business plan delivered to the Authority under condition 4(a), deliver to the Authority annually a report on:
  • (i) the impact of the costs of the re-insurance arrangement on third-party policy premiums; and
  • (ii) the prudential soundness and solvency of all re-insurance carriers involved in the re-insurance arrangement.

12. (Issuing quotes and accepting premiums)

• (a) If the Licensee receives a request from the owner of a motor vehicle to quote the premium payable for insurance under a third-party policy of the motor vehicle, together with the information needed by the Licensee to calculate the premium, then the Licensee must issue the requested quote to the relevant owner.
• (b) If the owner of a motor vehicle tenders payment of the premium quoted by the Licensee for insurance under a third-party policy of the motor vehicle, then the Licensee must accept the premium.

13. (Notifications)

• (a) (Significant matters) The Licensee must formally notify the Authority of a significant matter within the timeframes and in accordance with requirements established, prescribed and published by the Authority.
• (b) (Other events or circumstances) The Licensee must, within 5 working days of becoming aware of an event or circumstance described in section 9.9(3) of the Act, give notice to the Authority of the particulars of the event or circumstance.
• (c) (Breaches notified to APRA) Without limiting condition 6(a), the Licensee must, within 5 working days of giving a notice or report to APRA under section 38AA of the Insurance Act, give a copy of the notice or report to the Authority.
• (d) (Undertakings given to APRA) The Licensee must notify the Authority within 5 working days if:
  • (i) the Licensee gives, withdraws or varies an undertaking under section 126 of the Insurance Act; or
  • (ii) APRA makes an application to the Federal Court under section 126 of the Insurance Act.
• (e) (Breaches notified to ASIC) The Licensee must, within 5 working days of lodgement with ASIC (or deemed lodgement with ASIC) of a written report under section 912D of the Corporations Act 2001 (Cth) which relates (in whole or in part) to the Licensee's third-party insurance business, give a copy of the written report to the Authority.
• (f) (Reports of the Privacy Commissioner) The Licensee must, within 5 working days after the Privacy Commissioner gives a copy of a report to the Licensee under section 47 of the Health Records and Information Privacy Act 2002 which relates (in whole or in part) to the Licensee's third-party insurance business, give a copy of the report to the Authority.
• (g) (Determinations by the Information Commissioner) The Licensee must, within 5 working days of receiving notice of a determination by the Information Commissioner under section 52 of the Privacy Act which relates to a complaint against, or an act or practice of, the Licensee in the conduct of its third-party insurance business, give a copy of the notice to the Authority. This condition 13(h) does not apply to a determination dismissing a complaint.
• (h) (Undertakings given to the Information Commissioner) The Licensee must notify the Authority within 5 working days if, in relation to the whole or a part of the Licensee's third-party insurance business:
  • (i) the Licensee gives, withdraws or varies an undertaking under section 33E of the Privacy Act; or
  • (ii) the Information Commissioner makes an application to the Federal Court under section 33F of the Privacy Act.

14. (Business Rules Deed) The Licensee must be a party to the Business Rules Deed.