Non-admitted insurance: Not prohibited, except for compulsory coverage. Under the Insurance Act of 1973, the insured must pay a punitive tax if it places business with a unauthorised foreign insurer.
Premium tax paid by insured: Australia remains the highest insurance premium tax country in the world. Fees and taxes vary by state, but the average range is 5% to 11.5% and includes all lines of insurance. The fire service levy in New South Wales is 26%.
Regulator: The Australian Prudential Authority (ARPA) and the Australian Securities and Investment Commission (ASIC) are the ultimate regulatory authorities for the insurance industry in Australia.
Overview: While Australia is no longer considered to be a catastrophe-free zone, rates in the region for most major classes of business remain competitive.
A hardening insurance market is anticipated. Following the introduction of a financial stability package in October 2008, the Australian government passed a law that gives regulators the mechanism to impose levies on general insurers that become insolvent and do not have the assets to pay policy holder claims. It means that policyholders will be able to claim under a dedicated compensation scheme rather than pursue a claim through the normal liquidation process. The scheme is primarily aimed to cover individuals rather than large organisations.
Overall risk rating: very low