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Tuesday, 30 May 1972
Page: 2310

Senator COTTON - On 12th April 1972 Senator James McClelland asked me a question without notice concerning proposed legislation for the supervision of general insurance companies in Australia.

The Treasurer has now provided the following answer to the honourable senator's question: ' ^

The proposed legislation for the supervision of general insurance companies will not be completed in time for introduction during the present session.

This is despite strenuous efforts by all concerned and the taking of some exceptional measures to speed up the work. For example, when it became apparent early this year that Commonwealth drafting resources could not be diverted to the general insurance legislation owing to the pressures on the Office of Parliamentary Counsel for the preparation of other important legislation, an approach was made to the Victorian Government for drafting assistance. The Victorian Government responded readily to the request by making a senior draftsman available.

The length and complexity of the drafting is due essentially to the nature of general insurance business. General insurance is not a simple homogeneous commercial activity, but one of great variety and flexibility, in which many different types of business organisations, small medium and large, offer insurance cover against a great variety of risks, including through reinsurance the protection of direct insurers themselves. One of the main poblems in preparing the legislation has been to ensure that it embraces equitably all the different types of insurers and their businesses.

While it is just as disappointing to all those who have been waiting for this legislation as it is to me not to have a completed Bill ready for this Session, considerable progress has been made.

As I announced in my statement of 9th December 1971 it is proposed that the transitional arrangements for bringing existing insurers within the scope of the new legislation should apply to insurers legally carrying on insurance business on the date of the statement. This means that those wishing to commence insurance business after 9th December 1971 would come under the full provisions of the legislation when it enters into force and should arrange their affairs wilh this in mind. Hie statement should thus have had the effect of discouraging the further entry of small unsound companies into insurance business and seems already to have made a contribution towards meeting the problems in the insurance industry which were causing concern.

Furthermore, the statement has put the industry on notice that the time is approaching when it will have to measure up to minimum solvency standards, lt has thus given insurers an opportunity of thinking about the business effects of the introduction of a comprehensive supervisory system and of discussing among themselves some of the general implications.

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