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LIFE INSURANCE BILL 1994
LIFE INSURANCE (CONSEQUENTIAL AMENDMENTS AND REPEALS) BILL 1994

Order of the day read for the adjourned debate on the motion of the

Minister for the Environment, Sport and Territories (Senator

Faulkner)--That these bills be now read a second time.

Debate resumed.

Question put and passed.

Bills read a second time.

The Senate resolved itself into committee for the consideration of the

bills.

In the committee

LIFE INSURANCE BILL 1994--

Bill, taken as a whole by leave, debated.

Explanatory memorandum: The Parliamentary Secretary to the Minister for

Primary Industries and Energy (Senator Sherry) tabled a supplementary

explanatory memorandum relating to the Government amendments to be moved

to the bill.

On the motion of Senator Sherry the following amendments, taken together

by leave, were debated and agreed to:

Clause 11, page 4, after subclause (1), insert the following subclause:

"(1A) In order to avoid doubt and without limiting paragraph (1)(b),

it is declared that the reference in that paragraph to business that

relates to business referred to in paragraph (1)(a) includes business

relating to the investment, administration and management of the

assets of a statutory fund.".

Clause 11, page 4, paragraph (2)(e), line 31, after "provision", insert

", by a person other than a life company,".

Clause 24, page 12, at end of clause, add the following subclauses:

"(6) Commissioner's rules may modify the operation of subsection 23(2)

in relation to a specified existing life company.

"(7) If Commissioner's rules are in force for the purposes of

subsection (6), the operation of subsection 23(2) in relation to the

existing life company concerned is modified accordingly.".

Clause 30, page 14, paragraph (f), lines 3 to 5, omit the paragraph,

substitute the following paragraph:

"(f) profits and losses of a statutory fund may only be dealt with

in accordance with Divisions 5 and 6 (the object of those

Divisions being to ensure that such profits and losses are

dealt with in a manner that protects the interests of policy

owners and is consistent with prudent management of the

fund).".

Clause 32, page 14, lines 28 to 35, omit the clause, substitute the

following clause:

Duty of company in relation to statutory funds

"32.(1) In the investment, administration and management of the assets

of a statutory fund, a life company:

(a) must comply with this Part; and

(b) must give priority to the interests of owners and

prospectiveowners of policies referable to the fund.

"(2) An act or decision of a life company in relation to a statutory

fund does not contravene paragraph (1)(b) if, having regard to the

circumstances existing at the time of the act or decision, it is

reasonable to believe that the act or decision gives priority to the

interests of owners and prospective owners of policies referable to

the fund.

"(3) An investment by a life company is not ineffective merely because

it is made in contravention of paragraph (1)(b).

"(4) A reference in subsection (1) or (2) to the interests of owners

of policies referable to a statutory fund is a reference to the

interests of such persons viewed as a group.

"(5) Nothing in subsection (1) prevents a life company doing anything

that the company is permitted by this Part to do.".

Clause 41, page 18, subclause (1), line 19, after "subsection (2)",

insert "and subsection 32(3)".

Clause 43, page 19, subsection (2), line 26, omit "promote", substitute

"further".

Clause 43, page 19, subsection (3), line 27, omit all words from "The"

to "following:", substitute the following:

"(3) The general rule stated in subsection (2) is subject to the

following qualifications:".

Clause 48, page 22, subclauses (2) to (4), lines 1 to 14, omit the

subclauses, substitute the following subclauses:

"(2) The director's duty is a duty to take reasonable care, and use

due diligence, to see that, in the investment, administration and

management of the assets of the fund, the life company:

(a) complies with this Part; and

(b) gives priority to the interests of owners and prospective owners

of policies referable to the fund.

"(3) In order to avoid doubt, it is declared that, in the event of

conflict between the interests of owners and prospective owners of

policies referable to a statutory fund and the interests of

shareholders of a life company, a director's duty is to take

reasonable care, and use due diligence, to see that the company gives

priority to the interests of owners and prospective owners of those

policies over the interests of shareholders.

"(4) A reference in subsection (2) or (3) to the interests of owners

of policies referable to a statutory fund is a reference to the

interests of such persons viewed as a group.".

Clause 48, page 22, subclause (8), lines 28 to 30, omit the subclause.

Clause 259, pages 116 and 117, subclause (2), line 37 (page 116) to line

1 (page 117), omit the subclause, substitute the following subclause:

"(2) The reference in paragraph (1)(c) to an investigation of a

company's financial condition is a reference to an investigation made

under section 113.".

Clause 259, page 117, at end of clause, add the following subclause:

"(4) Until the end of the first financial year of an existing life

company that ends after the commencement of this Act, this section has

effect in relation to the company as if:

(a) all words of subsection (1) after "policy' in paragraph (1)(b)

were omitted; and

(b) subsection (2) were omitted.".

Schedule, page 120, definition of "continuous disability policy",

paragraph (c), omit the paragraph, substitute the following paragraph:

"(c) the terms of which do not permit alteration, at the instance of

the life company concerned, of both the benefits provided for

by the contract and the premiums payable under the contract;".

Bill, as amended, agreed to.

LIFE INSURANCE (CONSEQUENTIAL AMENDMENTS AND REPEALS) BILL 1994--

Bill, taken as a whole by leave, debated and agreed to.

The Life Insurance Bill 1994 to be reported with amendments and the Life

Insurance (Consequential Amendments and Repeals) Bill 1994 to be

reported without amendments.

The Acting Deputy President (Senator Herron) resumed the Chair and the

Temporary Chairman of Committees (Senator West) reported accordingly.

On the motion of the Minister for Small Business, Customs and

Construction (Senator Schacht) the report from the committee was adopted

and the bills read a third time.