INTRODUCTIONThe Australian insurance industry is a well developed and sophisticated insurance market in the world. The industry is characterized by immense growth and provision of quality service to customers. The industry is well governed by laws and legislations. The insurance market can be divided into three major components these are: general insurance life insurance and health insurance. The major players in the industry focus on one of these insurance markets for better provision of the services. However in the recent past the insurance agents and brokers are now venturing into more general financial services due to the stiff competition from banks and financial conglomerates.
The production corporation is a critical major component in the monetary service segment within the country. The Broad assurance sector has a worldwide character; it is known for its product development, customer service and participation in financial and regulatory reforms. The general insurance products can be categorized into liability insurance such as motor insurance, business insurance, professional indemnity and worker compensation insurance among others. The other category is the properties insurance which includes travel insurance, comprehensive motor insurance and home and contents insurance.
On the other hand life insurance industry has recently been characterized by increased involvement in the delivery of retirement merchandises and amenities. The products in the life insurance include disability income insurance, term life insurance. The insurance industry is governed by laws and statutes enacted by parliament and other regulatory principles and policies. The several laws and regulations which regulate insurance contracts, insurance industry is termed as the Australian insurance law. Under section 51 XIV and XX of the constitution the common wealth parliament is given the authority to enact laws with respect to the insurance industry and insurance.
In general the Insurance Act of 1973 and the insurance contracts act of 1984 are the major acts that the Australia insurance law refers to. However other legislations and regulations are enacted by the different states. Private codes and case laws also make up the Australian insurance law. Historical perspective. The Australian insurance industry dates back to the late 18th century. During this period the British companies in the country set up rates and insurance policies that were followed though out the country.
A federal royal commission was established in 1908 to inquire into the industry, the commission recommended a common wealth regulation of the insurance industry in 1910. However the common wealth governments failed to implement the legislation. The private regulation by the British companies which was known as the ‘tariff ‘, went on until 1974.The British regulations ‘tariff’ coexisted with other legislations in the country. The implementation of these legislations was hampered by the World War I and II. The common wealth later in 1973 introduced the solvency regulation to be adopted by all genera insurance companies, legislation s till in place to date.
Other legislations and private regulations were still in use and were only abandoned upon establishment of the Trade Practices Act 1974Before 1998 the regulation and supervision of the financial and insurance institutions were based on the status quo rather than on the nature of service the institution is providing. The Wallis committee on financial system inquiry recommended that the regulation and supervision structure be based on the functional basis of the institution.
The committee further proposed that for each of the functions identified a body or agency be established and charged with the regulation of the activities in that sector.