General PHIAC Circulars
Circular No 07/14
REGISTRATION OF EXISTING PRIVATE HEALTH INSURERS
All existing private health insurers must register under the Private
Health Insurance Act 2007 (the PHI Act) so as to maintain
their registration status after 1 July 2008. PHIAC and the Department
of Health and Ageing (the Department) will require sufficient time to
register all insurers, so PHIAC is encouraging insurers to apply as soon
as possible.
Under the Private Health Insurance (Transitional Provisions and Consequential
Amendments) Act 2007, an organisation that was a registered organisation
prior to the commencement of the PHI Act is taken to be a private health
insurer. However, this transition will lapse on 1 July 2008 unless the
insurer is registered under Part 4-3 of the PHI Act before that date.
This means that if registration has not occurred by 1 July 2008, an existing
insurer can no longer offer private health insurance.
Process for registration
Insurers must complete their application on the approved form appreg003
and provide the supporting documentation which is detailed in appreg004.
Both forms can be downloaded from the PHIAC website.
Section 126-10 of the PHI Act requires the applicant to be a company
or a registered body within the meaning of the Corporations Act 2001.
All insurers will therefore need to provide in their application evidence
from ASIC that they have been incorporated or registered under that Act.
Insurers which are not already incorporated should contact ASIC now to
meet this compliance requirement before applying to PHIAC.
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When deciding an application for registration, PHIAC must consider whether
the insurer will be able to comply with the obligations under the PHI
Act, the ratio that the likely amount of management and administration
expenses bears to the likely amount of premiums, the number of policy
holders and the proposed premiums for the insurer's fund or funds (see
section 126-20 of the PHI Act and the Private Health Insurance (Registration)
Rules 2007).
PHIAC is also required to consider any information provided by the Department,
including whether the insurer is likely to be able to comply with the
obligations under the PHI Act, as well as any other matter PHIAC thinks
fit.
As PHIAC already has a good understanding of the financial position and
policy holder composition of insurers due to information provided to PHIAC
in quarterly reports, annual audit and financial condition reports, PHIAC
believes that it will be able to be consider financial and policy holder
aspects by reference to this information held by PHIAC. To do so, PHIAC
will require that the insurer provides with its application a statement
by the insurer's Board certifying that the Board is not aware of any matters
that would materially affect the current reported position on these aspects.
Insurers with a management expense ratio significantly in excess of the
industry average will be required to provide an additional statement from
the Board detailing what actions are in train to reduce this ratio over
the 12 months following the date of the application.
Each insurer will also have to ensure, before applying for registration,
that it is complying with all obligations imposed by or under the PHI
Act. PHIAC requires each application to include a statement from the Board
to this effect.
The application must be accompanied by three copies of the insurer’s
Rules and the company Constitution. 'Rules' is defined in the PHI Act
as the body of rules established by the insurer that relate to the day-to-day
operations of its health insurance business and any health-related business.
When making its application, the insurer must also give a copy of its
rules to the Department (see section 126-10(3) of the PHI Act). PHIAC
will refer the application and accompanying documents to the Department
to assist it to provide information to PHIAC about the application, including
the insurer's compliance with obligations under the PHI Act.
Restricted access insurers are encouraged to review their company Constitution
to ensure that they continue to meet the definition of a restricted access
insurer under the PHI Act. It may be that some insurer's constitutions
have broader definitions of 'restricted access groups' than what the new
legislation permits (see section 126-20(7) of the PHI Act).
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Timeframe for making applications
There is a tight timeframe for assessing all registration applications.
The Council must make a decision within 90 days of receipt of each application,
or 90 days after a copy of the applicant's rules has been given to the
Department, or 90 days from the date when further information sought by
PHIAC is provided, whichever is the latest. If the decision is not made
in this timeframe, PHIAC will be taken to have refused the application.
A refusal by PHIAC or a refusal because the time period has expired will
mean the insurer cannot continue to offer private health insurance. It
is therefore imperative that applications be lodged well in advance of
1 July 2008 and that applications are complete at the time of lodgment.
Applicants will be notified of the Council’s decision within seven
days of the decision.
An insurer refused registration or which disagrees with any conditions
imposed by PHIAC has a right of review of the decision in the Administrative
Appeals Tribunal.
Processing of insurers' application
PHIAC encourages all insurers to commence work on their applications
now to avoid a rush of applications in early 2008. We also encourage insurers
to speak with the Department before submitting their application to ensure
any possible problems are identified and dealt with prior to lodgment.
The Department will be in contact with funds shortly to advise its processes
for registration. Mrs Anne Kingdon, Director Legal Policy, is the Department’s
contact officer for all issues relating to the registration process. Anne
can be contacted on (02) 6289-8283 or at anne.kingdon@health.gov.au
To ensure all applications are assessed by PHIAC’s Council before
the 1 July 2008 cut-off date, PHIAC must receive all applications by 1
February 2008. This will provide time to seek further information
if required and review applications to ensure insurers are meeting all
obligations under the new Act
While PHIAC will be working to meet the 1 July 2008 deadline for all
insurers, there is a risk that applications received after 1 February
2008 may not be processed before 1 July 2008 where PHIAC needs to seek
further information from insurers. The implication of this scenario is
very clear: the insurer will not be able to offer private health insurance
post 1 July 2008.
Manner of giving the application form
Given the importance of this regulatory process, PHIAC requires that
all registration applications by existing insurers be sent by registered
post, addressed to:
The Private Health Insurance Administration Council
Attention: Mr Karl Niemann
Suite 16, 71 Leichhardt St
KINGSTON ACT 2604
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