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Fund solvency requirements and capital adequacy requirements

Insurance Act 1966

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—(1) Every licensed insurer must satisfy —(a)such fund solvency requirements in respect of each insurance fund established by the insurer under this Act; and(b)such capital adequacy requirements,as may be prescribed or specified in directions for the purposes of this section.(2) The Authority may prescribe or specify in directions —(a)different fund solvency requirements or capital adequacy requirements under subsection (1) for different classes of insurance business and for different types of insurers; and(b)in respect of any type of insurers, any exception from the requirements of subsection (1).(3) Without limiting section 154, regulations made under this Act, or directions made under subsection (1) or (2), may —(a)provide for the determination of the value of assets and the amount of liabilities;(b)provide that, for any specified purpose, assets or liabilities of any specified class or description are to be left out of account or are to be taken into account only to a specified extent; and(c)make different provision in relation to different cases or circumstances.(4) The Authority may by written notice, if it considers it appropriate in the particular circumstances of a licensed insurer having regard to the risks arising from the activities of the insurer and any other factors that the Authority considers relevant, direct that the insurer satisfy fund solvency requirements or capital adequacy requirements other than those that the insurer is required to maintain under this section.(5) Without limiting section 102, the failure of a licensed insurer to comply with subsection (1) or any direction of the Authority under subsection (4) is sufficient cause for the Authority to be satisfied that the affairs of the insurer are being conducted in a manner likely to be detrimental to the public interest or the interests of the policy owners and to issue such directions under section 102(1) as the Authority may consider necessary.(6) Any licensed insurer which contravenes subsection (1) or fails to comply with a direction of the Authority under subsection (4) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $250,000 and, in the case of a continuing offence, to a further fine not exceeding $25,000 for every day or part of a day during which the offence continues after conviction.[18

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