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Tuesday, 17 February 1987
Page: 53

(Question No. 3721)


Mr Jacobi asked the Treasurer, upon notice, on 10 April 1986:

(1) Is he able to say how many (a) general insurance companies have gone into liquidation since 1980, (b) of the cases involved alleged misappropriation of funds by company executives and (c) claims were left outstanding by each collapse.

(2) What was the final, or most recent, dividend payable in each instance.

(3) Were the powers vested in the Office of the Insurance Commissioner by the Insurance Act adequate to prevent each collapse.

(4) Was the exercise of available powers by the Office of the Insurance Commissioner sufficient to protect the public interest in each case.

(5) Will he take action to empower the Insurance Commissioner to call upon an insurer to furnish any relevant information (a) not limited to statutory accounts or documents and (b) at any time; if not, why not.

(6) When will he take steps to have a ``fit and proper persons'' provision inserted in the relevant Acts.


Mr Keating —The answer to the honourable member's question is as follows:

(1) (a) The following six general insurance companies have gone into liquidation since 1 January 1980:

Palmdale Insurance Limited (formerly Palmdale-AGCI Limited)

Service Extension Insurance Pty Ltd

Consolidated Insurances of Australia Limited,

Sapphire Insurance Company Pty Limited

China Underwriters Life and General Insurance Company Limited

Bishopsgate Insurance Australia Ltd.

China Underwriters Life and General Insurance Company Limited was a Hong Kong based company and was liquidated in Hong Kong. It operated only a small Branch Office in Australia.

In addition, two other companies namely, Fleet Motor and General Insurance Co (Aust) Pty Limited (formerly Automobile and General Insurance Co Pty Limited) and Crest Insurance Company of Australia Limited were placed in provisional liquidation. While the former's provisional liquidation has been finalised by a scheme of arrangement approved by the creditors and assented to by the Courts, the latter is still at the provisional stage.

(b) Two cases involved alleged misappropriation of funds by company executives.

(c) See answer to Question (2) below.

(2) I am informed that the liabilities of the following companies, which went into voluntary liquidation, were met in the normal course:

Service Extension Insurance Pty Ltd

Consolidated Insurances of Australia Limited

China Underwriters Life and General Insurance Company Limited

Information in respect of other companies on distributions made (and proposed distributions), which is based on material provided by relevant liquidators, is set out hereunder:

Name of Company and No. of claims

Dividends

Sapphire Insurance-

Insurance claims...36

Trade creditors...25

(No refunds on policies were made as policies were continued to maturity by the liquidator)

A dividend of 75 cents in the $ has been paid

A further dividend possibly of the order of 25 cents in the $, is likely to be paid

Palmdale AGCI-

Workers' compensation claims...8,200

Other insurance claims...7,000

Policy refunds...16,000

Trade creditors...190

(Workers' compensation claims have been paid in full through State Government statutory schemes)

A dividend of 45 cents in the $ has been paid in respect of Palmdale and 50 cents in the $ in respect of AGCI. Most likely final dividend:

* Palmdale-60-75 cents in the $

* AGCI-100 cents in the $

Bishopsgate Insurance-

Workers' compensation claims...approx. 5,000

Other insurance claims...approx. 5,000

Policy refunds...15,000

Trade creditors...1,000

(Workers' compensation claims have been paid in full through State Government statutory schemes)

The first dividends are expected to be paid early this year.

(3) and (4) The Insurance Act establishes arrangements for the prudential supervision of authorised insurers so as to protect insureds. Improvements have been made to the supervisory arrangements in recent years, including more stringent solvency requirements and improved quarterly returns. The arrangements are subject to continuing review and monitoring.

I should add, however, that the Act does not purport to be a guarantee against failure of an insurer; such a guarantee would involve an unacceptable and costly level of intervention in the affairs of insurers and insureds.

(5) Powers of the kind proposed by the honourable member are provided for in sections 51, 115 and 115a of the Act.

(6) As indicated in part (24) of my answer to Question No. 11 (Hansard 19 November 1985 page 3187), an examination is being made regarding the possible amendment of the Insurance Act to incorporate provisions concerned with oversighting the suitability of directors and owners of authorised insurers and associated matters. This examination, which also embraces the possibility of incorporating similar provisions in the Life Insurance Act, is nearing completion but there is a need to explore some aspects further with the Insurance Commissioner, the Life Insurance Commissioner and industry representatives. I am hopeful that this examination will be completed shortly.