subject: Have lawyers made the insurance industry overregulated? [print this page] Have lawyers made the insurance industry overregulated?
The insurance industry is a mature global industry which has a number of very large international firms as well as local players all vying for market share in their given spheres of influence. In the early stages of the development of the insurance industry however, the industry was very under regulated and some very shadt providers of insurance were allowed to operate in the market with little or no supervision or control from government regulators. However, in recent times, particularly with the impact of the global financial crisis, the insurance industry has become increasingly regulated. As an example, Australian insurance law has made more steps towards ensuring the financial stability and viability of its major insurers. This process was begun during the days of the HIH Royal Commission which resulted from the catastrophic collapse of Australia's largest insurance companies.
In Australia, the body of insurance law which regulates the insurance industry and insurance contracts emanates from the parliament which has the authority to make laws with repsect to insurance and insurance companies under section XIV and XX of the Australian Constitution. The major piece of legislation which the parliament has pased under this power is the Insurance Act 1973 and Insurance Contracts Act 1984. Chapter 7 of the Corporations Act 2001 (Cth) also has some application of the insurance industry. The regulator concerned with operations conducted under the Insurance Act 1973 is the Australian Prudential Regulation Authority ("APRA").
Apart from law, there is also a series of more informal compliance mechanisms which include the General Insurance Code of Practice that binds all general insurers who are signatories to it. The financial provisioning elements of the law in this area are what protected Australian companies from the impact of the global financial crisis. For this reason, it appears that the industry in Australia is not overregulated by regulated at an appropriate level to ensure the viability of the industry in times of crisis. If you have any questions about the regulation of this industry in Australia, please do not hesitate to contact the writer using the links below.
welcome to Insurances.net (https://www.insurances.net)
