Life Insurance Act 1995
The Life Insurance Act 1995 regulates the prudential aspects of the life insurance industry in Australia. The Act provides for the licensing of life insurance companies by APRA, imposes capital adequacy and solvency requirements, and governs the management of statutory funds. Life insurers are required to maintain separate statutory funds for their life insurance business, with assets held in trust for policyholders. The Act also regulates the valuation of liabilities, the distribution of surplus (policyholder bonuses), and the transfer or amalgamation of life insurance business. The Life Insurance Act complements the Superannuation Industry (Supervision) Act 1993 for insurance provided through superannuation.
Legal area: Insurance law governs the prudential regulation and supervision of insurance companies and life insurers.
Year enacted: 1995
Full text: https://www.legislation.gov.au/Details/C1995A00006
Key Provisions
- Part 2: Licensing of life insurance companies by APRA
- Part 3: Statutory funds (separate assets and liabilities for life business)
- Part 4: Solvency and capital adequacy standards
- Part 5: Valuation of liabilities and actuarial requirements
- Part 6: Distribution of surplus (policyholder benefits)
- Part 8: Transfer and amalgamation of life insurance business
- Part 10: APRA’s powers of investigation and direction
Significance
The Life Insurance Act 1995 is a cornerstone of Australia’s life insurance regulation. The statutory fund requirement provides important protection for policyholders by ring-fencing life insurance assets from the insurer’s other business. The Act has been amended to implement the Loyalty Reforms (2020) and to strengthen APRA’s enforcement powers following the Financial Services Royal Commission.