09/12

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Circular No 09/12

Contact Officers:
Josh Edwards (02) 6215 7916
email: josh.edwards@phiac.gov.au

Replaces Circular: NA

24 July 2009

PDF Format:

Circ 09/12

DEVELOPMENT OF AN INDUSTRY WIDE GOVERNANCE STANDARD: CLARIFICATION OF INDEPENDENT DIRECTOR PROVISIONS

This circular seeks to clarify the position of PHIAC regarding director independence as it relates to private health insurers in corporate group structures. 
 
This information is being circulated for comment from private health insurers and other interested parties.
 
Following initial feedback and to avoid doubt, PHIAC proposes that Schedule 1, section 1(7) be amended to read as follows:
 
(7)   An independent director of a private health insurer shall not cease to be regarded as an independent director merely because he or she is a director of:
       (a) the parent company of the private health insurer; or
       (b) another subsidiary of the parent company of the private health insurer.
 
This provision removes any doubt that independent directors of the parent company and/or the board of another subsidiary of the parent company will not lose their independent status by reason of those directorships.
 
This requirement does not, however, remove from the board of the private health insurer the need to comply with the independence criteria as detailed in the definition of an independent director in Rule 4 of the draft standard.
 
PHIAC welcomes further submissions relating to this proposed amendment or other components of the draft governance standard, including information on the impact of the proposed standard, and any compliance costs insurers are likely to face.
 
Once received, submissions will be provided to the Council so that it may be in possession of all relevant information when it considers making the governance standard.
 
Submissions should be addressed to:
 
The Manager – Prudential Standards
Private Health Insurance Administration Council
PO Box 4549
KINGSTON ACT 2604
 
Or by email: phiac@phiac.gov.au marked ‘Governance Standard’.
 
Written submissions on the content and regulatory impact of the draft standard must be received by COB Wednesday, 5 August 2009.
 
Submissions to PHIAC will be treated as public unless clearly marked as confidential. Submissions may be the subject of a request for access made under the Freedom of Information Act 1982.