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Specialised insurer licence

Specialised insurer licence

Issued pursuant to division 3 of part 7 of the Workers Compensation Act 1987.

Standard conditions

This licence is granted to ______________________________________________________________ ABN (the Licensee) __________________________ for five years commencing at 4.00pm on ______________________ and ending at 4.00pm on ______________________. This licence is endorsed with a specialised insurer endorsement and is subject to:

  • conditions prescribed now and in the future by the Act or any regulations and
  • following additional conditions.

Additional conditions

In these licence conditions:

Act means the Workers Compensation Act 1987.

APRA means the Australian Prudential Regulation Authority established by the Australian Prudential Regulation Authority Act 1998 and any successor authority.

Business Day means a weekday on which the State Insurance Regulatory Authority’s head office is attended and open.

Defined Industry means the industry defined in section 2.1.

Key Operational Functions means:

  • underwriting
  • policy administration
  • case management incorporating claims and injury management
  • complaints management, dispute prevention and dispute resolution
  • information management and processing
  • any other operational functions (being functions which relate to the statutory obligations of insurers under legislation) from time to time notified by the State Insurance Regulatory Authority to Licensed Insurers.

Licensed Insurer has the same meaning as under the Act.

Licensee means the entity that the State Insurance Regulatory Authority is authorising to be a specialised insurer under the Act and whose licence is endorsed with a specialised insurer endorsement.

SIRA means the State Insurance Regulatory Authority.

References to legislation include any successor legislation and references to particular provisions of legislation which is replaced include references to the equivalent provisions in the successor legislation.

1. Compliance with workers compensation legislation and directions

1.1   The Licensee must comply with its obligations as a specialised insurer under the Act, the Workplace Injury Management and Workers Compensation Act 1998, the Workers Compensation Regulation 2010 and statutory guidelines as in force from time to time.

1.2   The Licensee must comply with all statutory directions and additional conditions of the licence issued by SIRA, which are elaborated in the licensing framework.

2. Restriction of Licensee’s business to a Defined Industry

2.1   The Licensee is only licensed to issue and renew a policy of workers compensation insurance to employers whose main business or industrial activity concern the following primary activities within the WorkCover Industry Classification (WIC) codes as defined in the Insurance Premiums Order:

[Insert primary activities within WIC]

OR

[Insert other individual conditions restricting the licensee’s business to a defined industry to be inserted] thereafter known as the Defined Industry.

2.2   The licensee shall issue or renew a policy of workers compensation insurance to all employers operating in the Defined Industry that request coverage.

2.3   The licensee shall provide access to fair and reasonable workers compensation insurance to all employers within the Defined Industry utilising a suitable risk assessment.

3. Maintaining Federal authorisation to carry on insurance business

3.1   The Licensee must maintain an authority to carry on insurance business under the Insurance Act 1973 (Commonwealth).

3.2   The Licensee must comply with the financial conditions and directions to which its authority under the Insurance Act 1973 is subject.

3.3   The Licensee must provide to SIRA within five Business Days:

  • copies of the GRF 110 Capital sections of the quarterly and annual financial returns submitted to APRA by or on behalf of the Licensee.
  • in relation to the solvency of the Licensee, any notice issued by APRA or the Treasurer to the Licensee (or any authorised non-operating holding company) under the Financial Sector (Collection of Data) Act 2001 and the Insurance Act 1973.

3.4   The Licensee must notify SIRA in writing within five Business Days of:

  • any material non-compliance with the financial conditions and directions to which its authority under the Insurance Act 1973 is subject
  • any material non-compliance with a requirement of the Financial Sector (Collection of Data) Act 2001, the Insurance Act 1973 or Insurance Regulations 2002.

The notification must be in writing to SIRA and include all details relating to the non-compliance.

4. Control and ownership

4.1   The Licensee must be a body corporate that is owned and controlled by a relevant professional, business or other industry body with a substantive, long-established peak (and publicly recognised) involvement with the Defined Industry.

4.2   The Licensee is subject to the condition that the relevant professional business or industry body has:

  • ultimate beneficial ownership of at least 50% of the shares and paid up capital of the Licensee; and
  • control of at least 50% of the votes which may be cast at a general meeting of the Licensee.

4.3   Any change in the control and ownership of the Licensee must be notified within five Business Days in writing to SIRA.

4.4   The Licensee must notify SIRA in writing within 10 Business Days of becoming aware of an application made, or an approval issued, under the Financial Sector (Shareholdings) Act 1998 or the Insurance Acquisitions and Takeovers Act 1991 in respect of the Licensee.

4.5   The Licensee must notify SIRA in writing within 10 Business Days of making an application, or obtaining an approval, under the Financial Sector (Shareholdings) Act 1998 or the Insurance Acquisitions and Takeovers Act 1991 in respect of another Licensed Insurer.

4.6   The notification must be in writing to SIRA and include all details relating to the change in control or ownership, application or approval under the Financial Sector Shareholdings Act 1998 or Insurance Acquisitions and Takeovers Act 1991 of which the Licensee is aware.

4.7   The Licensee must not enter into any transaction the effect or purported effect of which is to transfer the whole or any part of its New South Wales workers compensation portfolio without SIRA’s prior written approval.

5. Governance – appointed directors

5.1   The directors of the Licensee must collectively have extensive experience and skills in:

  • the Defined Industry
  • workers compensation insurance; and
  • underwriting.

6. Financial viability

6.1   The Licensee must maintain at all times during the term of the licence long-term financial viability, prudent claims reserving policies and sufficient financial resources to meet its workers compensation claims liabilities.

6.2   The Licensee must make adequate provision in its annual financial statements for its outstanding workers compensation liabilities for an amount at not less than the central estimate of the outstanding claims liabilities plus any additional risk margin required by Australian Accounting Standards and/or APRA.

6.3   The Licensee must at all times have reinsurance arrangements in place in relation to its New South Wales workers compensation business which comply with the prudential standards and guidelines from time to time published by APRA in relation to reinsurance arrangements.

7. Provision of security

7.1   The Licensee shall maintain or provide, by a date to be advised by SIRA, security for such sums and in such manner as SIRA may from time to time determine for the purpose of securing the payment of workers compensation liabilities, including contingent liabilities, of the Licensee.

8. Management and administration of operations

8.1   Licensee must maintain the necessary infrastructure, systems, processes and resources to perform its obligations and functions, including injury, claims and complaints management, as a Licensed Insurer in accordance with legislative requirements and to the commercial standards acceptable to SIRA.

8.2   Before outsourcing the whole or any part of any Key Operational Functions the Licensee must obtain SIRA’s prior approval.

9. Work Health and Safety

9.1   Licensee must provide a work health and safety (WHS) loss management program approved by SIRA, which assists their insured employers to meet their WHS obligations based on a systematic approach to injury prevention.

10. Provision of data and information

10.1 Financial information

a. The Licensee must provide SIRA with a copy of its annual report (including audited financial statements) for each financial year or if it is a subsidiary of an Australian holding company, for its ultimate holding company.

b. The annual report must be provided by the date advised in the annual information requirements.

10.2 Actuarial report

The Licensee must provide SIRA with the following:

  • a.  an actuarial report prepared by a qualified actuary estimating the Licensee’s liability for reported and unreported claims in respect of its New South Wales workers compensation business at the end of that financial year. The report must:
    • i.  be prepared in accordance with the relevant professional standards published by the Institute of Actuaries in Australia
    • ii.  set out the assumptions upon which it is based
    • iii.  clearly state the central estimate of the liabilities, value of claims liabilities at 75 per cent level of sufficiency and the central estimate plus one half of the standard deviation above the mean
    • iv.  clearly state the provision which the actuary recommends or supports in the financial statements and the amount (if any) of prudential margin included in the provision
    • v.  certify that the provision recommended or supported is not less than the central estimate of the liabilities and certify that the provision recommended or supported is not less than the central estimate of the liabilities plus the risk margin required by APRA.
  • b.  A letter from the Licensee (if the Licensee is not regulated by APRA):
    • i.  stating the amount which has been included in the Licensee’s audited balance sheet as a liability for reported and unreported claims in respect of its New South Wales workers compensation business and
    • ii.  confirming that such amount is not less than the amount recommended or supported in the actuary’s report.
  • c.  The information must be provided by the date advised in the annual information requirements.
10.3 Operational data
  • a.  The Licensee must provide to SIRA at intervals determined by SIRA, information and data relating to policies, premiums, claims and complaints as SIRA reasonably requires to carry out its functions under the Act and to facilitate the measurement and assessment of the performance of the specialised insurer.
  • b.  The Licensee must ensure that such data is accurate and provided to SIRA within the time specified by SIRA.
10.4 Self-audit reports

The Licensee must provide to SIRA self-audit results of their case and injury management performance within timeframes as specified by SIRA.

10.5 Levy certificates

The Licensee must provide a certificate from its independent auditor certifying for the previous year the Licensee has remitted 4% of gross premium collected to SIRA.

10.6 Other information
  • a.  The Licensee must provide other information as specified by SIRA, at intervals determined by SIRA relating to the business, financial position and operations of the Licensee.
  • b.  The Licensee must notify SIRA in writing within 10 Business Days of any change or vacancy in the senior management position responsible for underwriting or claims for the Licensee’s New South Wales workers compensation business or the senior management position with overall responsibility for the business. The notification must be in writing to SIRA and include all details relating to the change or vacancy.

11. Notification of significant matters

11.1   The Licensee shall notify SIRA in writing of any matter involving the death of a worker, a matter that is or may be media sensitive or that may be regarded as significant because it involves, for example, litigation that may have significant implications for the workers compensation system. Notification of any significant matter should be in the SIRA approved form within five Business Days of the Licensee becoming aware of the matter.

11.2   Notification under clause 11.1 is in addition to the requirement under section 190 of the Act for the Licensee to notify SIRA within 21 days of events relating to the financial viability of the Licensee.

12. Ceasing to be a specialised insurer

12.1   The Licensee must provide at least three months formal notice to SIRA if it elects to cease underwriting new workers compensation policies.

[End of licence conditions]

Catalogue No. WC01634 © Copyright State Insurance Regulatory Authority 2015