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Regulations under the Life Insurance Act 1945



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TREASURER

EMBARGO

STATEMENT BY THE TREASURER, THE HON JOHN HOWARD, MP REGULATIONS UNDER THE LIFE INSURANCE ACT 1945

The T r e a s u r e r , Mr John Howard, to d ay announced t h a t H is

E x c ellen cy th e G overnor-G eneral in C ouncil had approved th e

making o f R e g u la tio n s under th e L if e In s u ra n c e Act 1945.

Mr Howard s a id t h a t th e main purpose o f th e R e g u la tio n s i s to

update th e r u le s i n th e F o u rth S chedule to th e Act r e l a t i n g to

th e c a lc u la tio n in acco rd an ce w ith th e Minimum V a lu a tio n B asis

of l i a b i l i t i e s under l i f e in s u ra n c e p o lic ie s . The r e f l a t i o n s

a ls o p ro v id e f o r s e v e r a l minor amendments to th e r e tu r n s

re q u ire d t o be fu rn is h e d under th e L if e In su ra n c e Act and

R e g u la tio n s .

The changes to th e Minimum V a lu a tio n B a sis i n th e F o u rth

S chedule w ill allow companies to p la ce v a lu e tio n s on t h e i r

l i a b i l i t i e s under p o lic ie s th a t ta k e account o f r a te s of

m o r t a lit y , i i t e r e s t r a t e s and c o s ts of s e l l i n g p o lic ie s th a t are.

more in l i n e w ith p re s e n t day c o n d itio n s .

NO. U >

2

W hile th e s e changes a f f e c t a te c h n ic a l a re a of th e l i f e

in s u ra n c e l e g i s l a t i o n and p r im a r ily r e l a t e to v a lu a tio n o f

p o lic y l i a b i l i t i e s , th ey a ls o a re of re le v a n c e to o th e r a s p e c ts

o f th e o p e ra tio n o f l i f e o f f i c e s in c lu d in g th e l e v e l s o f

r e s e r v e s h e ld to meet th o s e l i a b i l i t i e s . Depending on th e

c irc u m sta n c e s, o f in d iv id u a l companies and th e outcome o f

c a lc u la tio n s o f l i a b i l i t i e s made su b seq u en t to th e changes i n

th e F o u rth S c h e d u le , any r e s u l t a n t s u rp lu s i n re s e rv e s could be

a v a il a b le f o r a number of u ses in c lu d in g th e a l l o c a tio n of

in c re a s e d bonuses to p o lic y ow ners. The changes a re th u s of

s u b s t a n t i a l im p o rtan ce to th e . l i f e in s u ra n c e in d u s tr y (which has

been s e e k in g amendments to th e Minimum V a lu a tio n B asis f o r some

tim e ) and p o t e n t i a l l y to p o lic y ow ners.

The changes i n th e F o u rth S ch ed u le have been th e s u b je c t of

d e ta i le d d is c u s s io n s w ith r e p r e s e n ta tiv e s of th e l i f e in s u ra n c e

in d u s tr y and th e I n s t i t u t e o f A c tu a rie s of A u s t r a l i a . Mr Howard

acknow ledged th e v a lu a b le a s s is ta n c e which had been given by

th e s e r e p r e s e n t a t i v e s .

CANBERRA ACT

28 Feb 1978