The Australian Prudential Regulation Authority (APRA) announced today it had served notice on 11 Taxi Clubs that they appeared to be illegally offering Victorian taxi owners and drivers comprehensive insurance for their taxis.
APRA took this step in order to protect the rights of taxi operators and the general public from exposure to large claims made against policies written by the Taxi Clubs. APRA is concerned that unauthorised taxi insurers do not meet capital and prudential requirements and in the event of a run of claims, will not have the capital reserves nor the controls to meet claims.
Prima facie these Taxi Clubs appear to be structured as mutual aid schemes which, if operated appropriately, may qualify for an exemption from the provisions of the Insurance Act. However, APRA considers that evidence shows that they are conducting a business of insurance in contravention of the Act. The conduct of an insurance business without the required authorisation can attract significant penalties under the Act.
APRA is concerned that members may be unaware that:
- The Taxi Clubs are not regulated by APRA;
- The Taxi Clubs have little or no capital backing, and in limited cases appear to exist mainly to channel business into related panel beating businesses;
- members are not protected by the legislative provisions of the Act;
- members do not have the protection afforded by Australian Industry Complaints scheme, and there may be long and costly delays and potentially disputes when bringing a claim under their policy; and
- members may be liable to meet their own expenses in the event of an accident.
APRA is currently in discussion with Clubs to resolve their legal position. APRA is conscious that some of these arrangements are of long standing, and that the needs of policyholders are the primary concern.
APRA has invited the Clubs to demonstrate within 14 days that they are not operating in breach of the Insurance Act. Failing this, they have been given 21 days to choose the appropriate option for their given circumstances. The options available to the Clubs are to:
- make an application to become an authorised insurer under the Act; or
- restructure to become a true mutual aid scheme; or
- cease and desist current activities after giving members/policyholders 30 days notice.
APRA has been working with the Insurance Council of Australia to identify authorised insurers that are prepared to provide alternative cover for affected operators.
APRA encourages all taxi owners and drivers immediately to seek written confirmation of the status and nature of their insurance cover and seek independent advice where appropriate.
A list of all companies authorised to conduct insurance business in Australia appears on APRAs web-site at www.apra.gov.au/General/General-Insurers.cfm.
Should consumers wish to contact APRA they can do so on 1300 13 10 60.
| For further information: |
Media Enquiries only:
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| APRA Call Centre |
David Van |
| 1300 131 060 |
APRA - Public Affairs |
|
02 9210 3143 |
|
0418 649 474 |
