Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document

 Download WordDownload Word  Download PDFDownload PDF 


Bill home page
Table Of Contents
Previous Fragment    Next Fragment
Private Health Insurance Bill 2007

Part 4-5 Other obligations of private health insurers

Division 157 Introduction

157-1   What this Part is about

In addition to the obligations about health benefits funds, private health insurers have several other obligations relating to the conduct of their businesses. These include the following:

               (a)     having appointed actuaries;

              (b)     complying with prudential standards;

               (c)     exclusion of disqualified persons from management;

              (d)     reporting and notification obligations.

157-5   The Private Health Insurance (Insurer Obligations) Rules

                   Obligations of private health insurers are also dealt with in the Private Health Insurance (Insurer Obligations) Rules and the Private Health Insurance (Data Provision) Rules. The provisions of this Part indicate when a particular matter is or may be dealt with in these Rules.

Note:          The Private Health Insurance (Insurer Obligations) Rules are made by the Council under section 333-25. The Private Health Insurance (Data Provision) Rules are made by the Minister under section 333-20.



 

Division 160 Appointed actuaries

160-1   Appointment

             (1)  Subject to subsection (2), a private health insurer must have an actuary appointed by the insurer.

             (2)  Within 6 weeks after a person ceases to be the * appointed actuary of a private health insurer, the insurer must appoint another person to be the insurer’s actuary.

             (3)  A person must not hold an appointment as actuary of a private health insurer unless the person is eligible for such an appointment.

             (4)  A private health insurer may, in writing, ask the Council to approve the appointment of a specified person as the insurer’s actuary.

             (5)  The Council may, in writing, approve the appointment of a person as actuary of a private health insurer if the Council is satisfied that the person has actuarial qualifications and experience that fit him or her to perform the functions of the insurer’s * appointed actuary.

Note:          Refusals to give approval are reviewable under Part 6-9.

             (6)  An appointment of a person as actuary of a private health insurer cannot take effect while there is in force an appointment of another person as the insurer’s actuary.

160-5   Eligibility for appointment

             (1)  A person is eligible for appointment as a private health insurer’s actuary if the person meets the eligibility requirements specified in the Private Health Insurance (Insurer Obligations) Rules.

             (2)  However, a person who, apart from this subsection, would be eligible for appointment as a private health insurer’s actuary is not so eligible if there is in force a declaration by the Council in accordance with the Private Health Insurance (Insurer Obligations) Rules.

160-10   Notification of appointment etc.

                   A private health insurer must give the Council written notice in accordance with the Private Health Insurance (Insurer Obligations) Rules if:

                     (a)  the insurer appoints a person under section 160-1; or

                     (b)  a person ceases to be the * appointed actuary of the insurer.

160-15   Cessation of appointment

                   A person ceases to hold an appointment as the actuary of a private health insurer in the circumstances set out in the Private Health Insurance (Insurer Obligations) Rules.

160-20  Compliance with the Private Health Insurance (Insurer Obligations) Rules

                   The * appointed actuary of a private health insurer, in the performance of his or her duties and the exercise of his or her powers, must comply with the Private Health Insurance (Insurer Obligations) Rules.

160-25   Powers of appointed actuary

             (1)  The * appointed actuary of a private health insurer is entitled to have access to any information or document in the possession, or under the control, of the insurer if the access is reasonably necessary for the proper performance of the actuary’s functions and duties.

             (2)  The * appointed actuary of a private health insurer may require any * officer or employee of the insurer to answer questions or produce documents for the purpose of enabling the actuary to have the access to information and documents provided for by subsection (1).

             (3)  A private health insurer commits an offence if the insurer refuses or fails to allow access to information or a document under subsection (1).

Penalty:  30 penalty units.

             (4)  An * officer or employee of a private health insurer commits an offence if he or she refuses or fails to comply with a requirement under subsection (2).

Penalty:  30 penalty units.

             (5)  The * appointed actuary of a private health insurer is entitled to attend a meeting of the * directors of the insurer and to speak on any matter being considered at the meeting:

                     (a)  that relates to, or may affect:

                              (i)  the solvency of a * health benefits fund conducted by the insurer; or

                             (ii)  the adequacy of the capital of a health benefits fund conducted by the insurer; or

                     (b)  that relates to advice given by the actuary to the directors; or

                     (c)  that concerns a matter in relation to which the actuary will be required to give advice.

             (6)  The * appointed actuary of a private health insurer is entitled to attend:

                     (a)  any annual general meeting of members of the insurer; and

                     (b)  any other meeting of members of the insurer at which:

                              (i)  the insurer’s annual accounts or financial statements are to be considered; or

                             (ii)  any matter in connection with which the actuary is or has been subject to a duty under this Act is to be considered.

160-30   Actuary’s obligations to report

             (1)  The * appointed actuary of a private health insurer must draw to the attention of the insurer, or of the * directors or an * officer of the insurer, any matter that comes to the attention of the actuary and that the actuary thinks requires action to be taken by the company or its directors to avoid a contravention of this Act.

             (2)  If the * appointed actuary of a private health insurer thinks:

                     (a)  that there are reasonable grounds for believing that the insurer or a * director of the insurer may have contravened this Act or any other law; and

                     (b)  that the contravention is of such a nature that it may affect significantly the interests of * policy holders of any * health benefits funds conducted by the insurer;

the actuary must inform the Council in writing of his or her opinion and of the information on which it is based.

             (3)  If:

                     (a)  the * appointed actuary of a private health insurer has drawn to the attention of the insurer, or of the * directors or an * officer of the insurer, a matter that the actuary thinks requires action to be taken by the insurer or its directors to avoid a contravention of this Act; and

                     (b)  the actuary is satisfied that there has been reasonable time for the taking of the action but the action has not been taken;

the actuary must inform the Council in writing of the matter.

             (4)  If the * appointed actuary of a private health insurer thinks that:

                     (a)  the * directors of the insurer have failed to take such action as is reasonably necessary to enable the actuary to exercise his or her right under subsection 160-25(5) or (6); or

                     (b)  an * officer or employee of the insurer has engaged in conduct calculated to prevent the actuary exercising his or her right under subsection 160-25(5) or (6);

the actuary may inform the Council of his or her opinion and of the information on which it is based.

             (5)  If:

                     (a)  a person becomes subject to an obligation under subsection (2) or (3) to inform the Council of anything; and

                     (b)  before the person informs the Council, the person ceases to be the * appointed actuary of the private health insurer concerned;

the person remains subject to the obligation as if he or she were still the appointed actuary of the insurer.

160-35   Qualified privilege of appointed actuary

             (1)  A person who is, or has been, the * appointed actuary of a private health insurer has qualified privilege in respect of any statement, whether written or oral, made by him or her for the purpose of the performance of his or her functions as appointed actuary of the insurer.

             (2)  In particular (and without limiting subsection (1)), a person who is or has been the * appointed actuary of a private health insurer has qualified privilege in respect of:

                     (a)  any statement, written or oral, made by him or her under, or for the purposes of, a provision of this Act; and

                     (b)  the answer to any question he or she is required by the insurer to answer.

             (3)  The privilege conferred by this section is in addition to any privilege conferred on a person by any other law.



 

Division 163 Prudential standards

163-1   Private Health Insurance (Insurer Obligations) Rules to establish prudential standards

             (1)  The Private Health Insurance (Insurer Obligations) Rules may establish prudential standards relating to * prudential matters for private health insurers.

             (2)  Prudential matters are matters relating to:

                     (a)  the conduct by private health insurers of any of their affairs in such a way as:

                              (i)  to keep themselves in a sound financial position; or

                             (ii)  not to cause or promote instability in the Australian private health insurance system; or

                     (b)  the conduct by private health insurers of any of their affairs with integrity, prudence and professional skill;

but does not include matters relating to the solvency or capital adequacy of * health benefits funds.

             (3)  A * prudential standard may impose different requirements to be complied with:

                     (a)  by different classes of private health insurers; or

                     (b)  in different situations; or

                     (c)  in respect of different activities.

             (4)  A * prudential standard may provide for the Council to exercise powers and discretions under the standard, including but not limited to discretions to approve, impose, adjust or exclude specific prudential requirements in relation to a particular private health insurer or a particular class of private health insurers.

             (5)  A * prudential standard takes effect on the day on which it is established in the Private Health Insurance (Insurer Obligations) Rules, or on such later day as is specified in the Private Health Insurance (Insurer Obligations) Rules.

163-5   Compliance with prudential standards

                   Every private health insurer must comply with the * prudential standards as they apply in respect of that insurer.

163-10   Notice of breaches of prudential standards etc.

             (1)  A private health insurer commits an offence if:

                     (a)  it becomes aware of:

                              (i)  a breach by it of a * prudential standard; or

                             (ii)  any other matter or occurrence that materially affects its financial position; and

                     (b)  it fails to notify the Council, as soon as practicable, in writing of the breach or of the other matter or occurrence.

Penalty:  200 penalty units.

             (2)  If an individual:

                     (a)  commits an offence against subsection (1) because of Part 2.4 of the Criminal Code (extensions of criminal responsibility) ; or

                     (b)  commits an offence under Part 2.4 of the Criminal Code in relation to an offence against subsection (1);

he or she is punishable, on conviction, by a fine not exceeding 40 penalty units.

             (3)  A notification given to the Council of a matter referred to in paragraph (1)(a) must not include * personal information relating to a * policy holder of a * health benefits fund conducted by the insurer, unless the information relates to * prudential matters relating to the insurer.

163-15   Directions to comply with standards

             (1)  If the Council is satisfied that a private health insurer:

                     (a)  has breached a * prudential standard; or

                     (b)  is likely to breach a prudential standard in a way that is likely to give rise to a prudential risk;

the Council may (in writing) direct the insurer to comply with all or a part of the standard, or to take specified action, within a specified time.

Note:          Decisions to give directions are reviewable under Part 6-9.

             (2)  The insurer must comply with the direction despite anything in its constitution or in any contract or arrangement to which it is a party.

             (3)  The Council may revoke a direction that the Council considers is no longer necessary or appropriate by giving written notice to the insurer.

Note:          Refusals to revoke directions are reviewable under Part 6-9.

163-20   Failure to comply with directions

             (1)  A private health insurer commits an offence if the insurer contravenes a direction given to it under section 163-15.

Penalty:  300 penalty units.

             (2)  If an individual:

                     (a)  commits an offence against subsection (1) because of Part 2.4 of the Criminal Code (extensions of criminal responsibility); or

                     (b)  commits an offence under Part 2.4 of the Criminal Code in relation to an offence against subsection (1);

he or she is punishable, on conviction, by a fine not exceeding 60 penalty units.



 

Division 166 Disqualified persons

166-1   Private health insurers not to allow disqualified persons to act as directors

             (1)  A private health insurer commits an offence if the insurer allows a * disqualified person to be or to act as a * director or * senior manager of the insurer.

Penalty:  250 penalty units.

             (2)  Subsection (1) does not apply if the insurer:

                     (a)  contacted the Council within a reasonable period before allowing the person to be to or act as a * director or * senior manager, as the case may be; and

                     (b)  was advised by the Council that the person was not a * disqualified person.

Note:          A defendant bears an evidential burden in relation to the matters in this subsection. See subsection 13.3(3) of the Criminal Code .

166-5   Disqualified persons must not act for private health insurers

                   A * disqualified person commits an offence if he or she is, or acts as, a * director or * senior manager of a private health insurer.

Penalty:  120 penalty units or imprisonment for 2 years, or both.

166-10   Effect of non-compliance

                   A failure to comply with section 166-1 or 166-5 does not affect the validity of an appointment or transaction.

166-15   Who is a disqualified person ?

             (1)  A person is a disqualified person if, at any time:

                     (a)  the person has been convicted of an offence against or arising out of:

                              (i)  this Act; or

                             (ii)  the Corporations Act 2001 , the Corporations Law that was previously in force, or any law of a foreign country that corresponds to that Act or to that Corporations Law; or

                     (b)  the person has been convicted of an offence against or arising out of a law in force in Australia, or the law of a foreign country, if the offence concerns dishonest conduct or conduct relating to a financial sector company (within the meaning of the Financial Sector (Shareholdings) Act 1998 ); or

                     (c)  the person has been or becomes bankrupt; or

                     (d)  the person has applied to take the benefit of a law for the relief of bankrupt or insolvent debtors; or

                     (e)  the person has compounded with his or her creditors; or

                      (f)  the Council has disqualified the person under section 166-20.

Note:          The Council may determine that a person is not a disqualified person (see section 166-25).

             (2)  A reference in subsection (1) to a person who has been convicted of an offence includes a reference to a person in respect of whom an order has been made relating to the offence under:

                     (a)  section 19B of the Crimes Act 1914 ; or

                     (b)  a corresponding provision of a law of a State, a Territory or a foreign country.

             (3)  Nothing in this section affects the operation of Part VIIC of the Crimes Act 1914 (which includes provisions that, in certain circumstances, relieve persons from the requirement to disclose spent convictions and require persons aware of such convictions to disregard them).

166-20   Council may disqualify persons

             (1)  The Council may disqualify a person if it is satisfied that the person is not a fit and proper person to be or to act as a * director or * senior manager of a private health insurer.

Note:          Disqualifications are reviewable under Part 6-9.

             (2)  A disqualification takes effect on the day on which it is made.

             (3)  The Council may revoke a disqualification on application by the * disqualified person or on its own initiative. A revocation takes effect on the day on which it is made.

Note:          Refusals to revoke disqualifications are reviewable under Part 6-9.

             (4)  The Council must give the person written notice of a disqualification, revocation of a disqualification or a refusal to revoke a disqualification.

             (5)  As soon as practicable after a notice is given to a person under subsection (4), the Council must cause particulars of the disqualification, revocation or refusal to which the notice relates:

                     (a)  if the person is, or is acting as, a * director or * senior manager of a private health insurer—to be given to the insurer; and

                     (b)  to be published in the Gazette .

166-25   Council may determine that persons are not disqualified

             (1)  Despite section 166-15, the Council may determine (in writing) that a person is not a * disqualified person. The Council may do so on its own initiative or on the application of the person.

             (2)  However, the Council must not make the determination unless it is satisfied that the person is highly unlikely to be a prudential risk to any private health insurer.

             (3)  If a person applies for a determination under this section, the Council must:

                     (a)  either make, or refuse to make, the determination; and

                     (b)  in the case of a refusal, give the person written notice of the refusal.

Note:          Refusals to make determinations are reviewable under Part 6-9.

             (4)  The Council may do any of the following:

                     (a)  when making a determination under subsection (1), specify in the determination conditions to which the determination is to be subject;

                     (b)  at any later time while a determination under subsection (1) is in force, make a further determination specifying conditions or additional conditions to which the determination under subsection (1) is to be subject;

                     (c)  at any time make a determination varying or revoking conditions that have been specified under paragraph (a) or (b).

Note:          Decisions to specify, or to vary, conditions are reviewable under Part 6-9.

             (5)  A determination takes effect on the day on which it is made.

             (6)  The Council must, as soon as practicable after a determination is made, give written notice of the making of the determination, and a copy of the determination, to the person concerned and to any affected private health insurer.

             (7)  A notice of a refusal to make a determination, or a notice of the making of a determination that specifies or varies conditions, must state the reasons for the refusal or for the specifying or variation of the conditions, as the case may be.

             (8)  The Council may revoke a determination under this section by giving written notice to the person concerned and must give a copy of the notice to any affected private health insurer.

Note:          Revocations of determinations are reviewable under Part 6-9.



 

Division 169 Reporting and notification requirements

169-1   Copies of reports to policy holders

                   A private health insurer that makes any report to all or any of the * policy holders of a * health benefits fund conducted by the insurer must, if the Private Health Insurance (Insurer Obligations) Rules so require, give a copy of the report to the Council:

                     (a)  within one month after making the report; or

                     (b)  within such further time as the Council allows.

169-5   Information to be given to the Council annually

             (1)  A private health insurer must, within 3 months after the end of each financial year, or within such further time as the Council allows, give to the Council:

                     (a)  such financial accounts and statements in respect of that year as the Council requires to be given for use in preparing the report referred to in section 264-15; and

                     (b)  such other statements in respect of that year as are required by the Private Health Insurance (Insurer Obligations) Rules.

             (2)  The report must be certified on behalf of the insurer, in accordance with the Private Health Insurance (Insurer Obligations) Rules, to be true and correct.

             (3)  A private health insurer commits an offence if the insurer fails to comply with this section.

Penalty:  30 penalty units.

             (4)  Strict liability applies to subsection (3).

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

169-10   Private health insurers to notify any changes to rules

             (1)  A private health insurer that proposes to change its * rules (other than a change to which section 66-10 applies) must notify the Secretary of the Department of the proposed change:

                     (a)  in the * approved form; and

                     (b)  before the day on which the insurer proposes the change to take effect.

Note:          See section 93-25 for a private health insurer’s obligation to notify insured persons of changes to its rules.

             (2)  The Minister may, in writing, direct the insurer not to make the change if the Minister is satisfied that the change might or would result in a breach of the Act.

Note:          Directions are reviewable under Part 6-9.

             (3)  The Minister must give the Secretary and the Council a copy of a direction under subsection (2).

169-15   Private health insurers to notify Department and Council about current chief executive officer

             (1)  An applicant for registration under Division 126 must, before starting to operate its * health insurance business, notify the name and contact details of its * chief executive officer to the Secretary of the Department, and to the Council, in the * approved form.

             (2)  A private health insurer must ensure that, if the name or contact details of its * chief executive officer change, the change is notified, before the change takes effect, to the Secretary of the Department, and to the Council, in the * approved form.

             (3)  A private health insurer commits an offence if:

                     (a)  the insurer is required under subsection (2) to ensure that a particular thing happens; and

                     (b)  the thing does not happen.

Penalty:  60 penalty units.

             (4)  Strict liability applies to subsection (3).

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



 

Division 172 Miscellaneous

172-1   Private health insurers to comply with Council’s requirements

                   A private health insurer must comply, within a reasonable time, with such requirements as the Council, in the performance of its functions, imposes on the insurer.

172-5   Agreements with medical practitioners

                   If a private health insurer enters into an agreement with a * medical practitioner for the provision of treatment to persons insured by the insurer, the agreement must not limit the medical practitioner’s professional freedom, within the scope of accepted clinical practice, to identify and provide appropriate treatments.

172-10   Private health insurers to give information to Secretary

             (1)  The Private Health Insurance (Data Provision) Rules may specify kinds of information, relating to treatment of * policy holders of * health benefits funds, that private health insurers are to give to the Secretary of the Department.

             (2)  A private health insurer must, in accordance with the Private Health Insurance (Data Provision) Rules, give to the Secretary of the Department any information of that kind that the insurer receives from a * hospital.

172-15   Restrictions on payment of pecuniary penalties etc.

                   A private health insurer must not:

                     (a)  use its money, or permit the use of its money, for:

                              (i)  the payment of a pecuniary penalty imposed on a * director or * officer of the insurer because of an offence under this Act; or

                             (ii)  the payment of an amount that a director or officer of the insurer, or a person who has been such a director or officer, is liable to pay under Division 149, 152, 203 or 293; or

                     (b)  reimburse:

                              (i)  a director or officer of the insurer in respect of a pecuniary penalty imposed on the director or officer because of an offence under this Act; or

                             (ii)  a director or officer of the insurer, or a person who has been such a director or officer, in respect of a liability imposed on the director under Division 149, 152, 203 or 293.