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CORPORATIONS REGULATIONS 2001 - REG 7.8.08

Debts of financial services licensee in relation to premiums etc

             (1)  Subregulations (2) to (4) apply if:

                     (a)  money is received by a financial services licensee:

                              (i)  from, or on behalf of, an insured or intending insured, or from another financial services licensee on behalf of an insured or intending insured; and

                             (ii)  as a premium or an instalment of a premium in connection with a contract of insurance or a proposed contract of insurance; and

                     (b)  the risk, or a part of the risk, to which the contract or proposed contract relates is accepted by or on behalf of an insurer; and

                     (c)  the financial services licensee who so received the money is informed of, or otherwise ascertains, the amount of the premium or instalment to be paid.

             (2)  The financial services licensee who received the money must pay to the insurer an amount equal to the amount of the premium or instalment to be paid:

                     (a)  in the period of 90 days (the relevant period ) after:

                              (i)  the day on which the cover provided by the insurer under the contract starts to have effect; or

                             (ii)  the first day of the period to which the instalment relates; or

                     (b)  if it is not practicable for the financial services licensee to pay the amount in the relevant period--as soon as practicable after the end of that period.

             (3)  If the financial services licensee has not received the amount of the premium, or of an instalment of the premium, payable in respect of a contract of insurance at the end of the relevant period, the financial services licensee must notify the insurer in writing, not later than 7 days after the end of the relevant period, that the financial services licensee has not received the amount.

             (4)  Subregulation (3) does not apply if the financial services licensee receives the amount:

                     (a)  in the period of 7 days mentioned in subregulation (3); and

                     (b)  before notifying the insurer in accordance with subregulation (3).

             (5)  Subregulations (6) and (7) apply if:

                     (a)  a financial services licensee receives money from, or on behalf of:

                              (i)  an insured or intending insured; or

                             (ii)  another financial services licensee on behalf of an insured or intending insured;

                            as a premium or an instalment of a premium in connection with a contract of insurance or a proposed contract of insurance; and

                     (b)  the risk, or a part of the risk, to which the contract or proposed contract relates is accepted by or on behalf of an insurer; and

                     (c)  the financial services licensee who received the money has not been informed of, and has not otherwise ascertained, the amount of the premium or instalment to be paid.

             (6)  The financial services licensee who received the money must pay the amount mentioned in subregulation (7) to the insurer:

                     (a)  in the period of 90 days (the relevant period ) after:

                              (i)  the day on which the cover provided by the insurer under the contract starts to have effect; or

                             (ii)  the first day of the period to which the instalment relates; or

                     (b)  if it is not practicable for the financial services licensee to pay the amount in the relevant period--as soon as practicable after the end of that period.

             (7)  For subregulation (6), the amount is:

                     (a)  for a new contract of insurance, an amount not less than the lesser of:

                              (i)  the amount of the money received; or

                             (ii)  75% of the amount fairly estimated by the financial services licensee to be the premium or instalment that is to be paid; and

                     (b)  for a renewal of a contract of insurance, an amount not less than the lesser of:

                              (i)  the amount of the money so received; or

                             (ii)  75% of the previous year's premium for the risk, or of the last instalment of that years premium.

             (8)  Subregulation (9) applies if:

                     (a)  the risk, or a part of the risk, to which a contract of insurance or a proposed contract of insurance relates is accepted by or on behalf of an insurer; and

                     (b)  the contract of insurance or proposed contract of insurance has been, or is being, arranged or effected by a financial services licensee ( licensee 1 ), either directly or through another financial services licensee; and

                     (c)  licensee 1 has not been informed of, and has not otherwise ascertained, the amount of a premium or of an instalment of a premium to be paid in connection with the contract or proposed contract.

             (9)  Licensee 1 must, notify the insurer in writing, within 10 days after the day on which the risk, or that part of the risk, was accepted, that:

                     (a)  the risk, or that part of the risk, has been accepted; and

                     (b)  licensee 1 does not know the amount of the premium or instalment to be paid;

unless licensee 1 is informed of, or otherwise ascertains, the amount of the premium or instalment to be paid before notifying the insurer.

           (10)  Nothing in this regulation prevents:

                     (a)  an insurer from making a contract or arrangement with a financial services licensee providing for the financial services licensee to pay an amount to the insurer before the time by which the financial services licensee is required by the provision concerned to pay that amount to the insurer; or

                     (b)  an insurer from authorising a financial services licensee in writing to pay on behalf of the insurer, out of the money received by the financial services licensee as a premium or instalment of a premium in respect of a contract of insurance arranged with the insurer, any charges required by law to be paid by the insurer in respect of the contract; or

                     (c)  a financial services licensee from exercising any legal right available to the financial services licensee to deduct from any moneys payable by the financial services licensee to the insurer any remuneration payable by the insurer to the financial services licensee in relation to a contract of insurance.

           (11)  For subregulation (1) or (5), if the risk, or a part of the risk, to which a contract or proposed contract mentioned in that subregulation is accepted on behalf of an insurer by an insurance intermediary other than the insurance financial services licensee who received the moneys from or on behalf of the insured or intending insured, the payment of the premium, or part of the premium, by the financial services licensee to the intermediary is taken to be a payment of the premium or part of the premium by the financial services licensee to the insurer.

           (12)  For subregulation (3) or (8), if:

                     (a)  a financial services licensee is required to notify an insurer in accordance with that subregulation; and

                     (b)  an insurance intermediary other than the financial services licensee has accepted the risk, or a part of the risk, to which the contract or proposed contract relates on behalf of the insurer;

a notification by the financial services licensee to the intermediary is taken to be a notification by the financial services licensee to the insurer.

           (13)  Subregulations (14) and (15) apply if:

                     (a)  a financial services licensee receives money from, or on behalf of, an insured or intending insured in connection with a contract of insurance or proposed contract of insurance; and

                     (b)  at the end of 30 days after the day on which the money was received, the risk, or a part of the risk, to which the contract or proposed contract relates has not been accepted.

           (14)  If the risk has not been accepted, the financial services licensee must, within 7 days after the end of the 30 day period:

                     (a)  give notice to the insured or intending insured, in a form (if any) approved by ASIC for this paragraph, that the risk has not been accepted; and

                     (b)  return the money to the insured or intending insured.

           (15)  If a part of the risk to which the contract or proposed contract relates has not been accepted, the financial services licensee must, within 7 days after the end of the 30 day period:

                     (a)  give notice to the insured or intending insured, in a form (if any) approved by ASIC for this paragraph, of the extent to which the risk has not been accepted; and

                     (b)  return that part of the money that relates to the part of the risk that has not been accepted to the insured or intending insured.

           (16)  If a financial services licensee receives money from, or on behalf of, an insurer for payment to, or on behalf of, an insured, the financial services licensee must pay an amount equal to the money to, or on behalf of, the insured:

                     (a)  within 7 days after the day on which the financial services licensee received the money; or

                     (b)  if it is not practicable for the financial services licensee to pay the amount in that period--as soon as practicable after the end of the period.

           (17)  Nothing in subregulation (16) prevents:

                     (a)  an insured from making a contract or arrangement with a insurance financial services licensee providing for the financial services licensee to pay an amount mentioned in that subregulation to or on behalf of the insured before the time by which the financial services licensee is required by that subregulation to pay that amount to or on behalf of the insured; or

                     (b)  a financial services licensee from exercising any legal right available to the financial services licensee to deduct from an amount payable by the financial services licensee to the insured any money payable by the insured to the financial services licensee in connection with a contract of insurance.

           (18)  A person is guilty of an offence if the person contravenes subregulation (2), (3), (6), (9), (14) or (16), whether or not it was done with the consent of the insurer or of the insured or intending insured.

Penalty:  10 penalty units.

           (19)  Subregulation (18) does not apply if the person has a reasonable excuse.

Note:          A defendant bears an evidential burden in relation to the matter in subregulation (18) (see subsection 13.3(3) of the Criminal Code ).

           (20)  Strict liability applies to subregulation (18).

Note:          For strict liability , see section 6.1 of the Criminal Code .

           (21)  If:

                     (a)  under subregulation (2), (3), (6) or (9), a financial services licensee is required to pay an amount to, or to notify, an insurer; and

                     (b)  under the contract or proposed contract of insurance concerned the insurer is an underwriting member of Lloyd's;

it is sufficient compliance with the subregulation if the financial services licensee pays the amount to, or notifies, as the case may be, the Lloyd's broker concerned.



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