Life Insurance Cover – An In-depth Overview

Just like any other firm in any sector, Lifeshield works through a definite set of objectives and regulations:-


The aims of life insurance supervision are two fold:

  • To protect policyholder interests; and
  • To foster a competitive and innovative marketplace.
  • Protection of the Interests of Policyholders. Policyholder protection involves several aspects. It seeks to ensure that the industry operates in a manner so as to provide for the current and expected prospective capitalization of life insurance companies at adequate levels;
  •  Ensure whether policyholder’s liabilities can be met as and when they fall due (often a considerable period of time into the future);
  • Ensure whether new entrants to the market are able to conduct life insurance business properly and are aware of their obligations; · Maintain confidence in the industry; and ensure that the equitable treatment of the participation of policyholders in the profits of the fund is secured on an on-going basis. Whilst less desirable, the regulatory structure also provides for the orderly and equitable transfer of business between and within companies, permitting exit from the market and the regulatory approval of changes in ownership of companies and control of assets.

Lifeshield carries out its role with an emphasis on these requirements very much in this order. Life Insurance management also provides regulatory management of companies where the interests of policyholders are at risk. This involves current policyholders as well as prospective policyholders.

Philosophy of Approach

The approach of to the prudential supervision of life insurance can be characterized as seeking that:

(i) The ultimate responsibility for the company rests with the directors;

(ii) Actuaries and auditors are critical advisers to the board, have responsibilities in the management of the company’s business through the Life Insurance Act 1995 (the Life Act), and a whistle blowing role to the regulator;

(iii) Intervention reinforces the responsibility of the board, actuaries and auditors, and maintains the ‘ring fence’ (see below);

(iv) It is important to maintain an active, visible presence in the industry; and

(v) Firm public enforcement is a last resort. Preference is given to anticipate any likely issues and to see them resolved by the company before they escalate.

Most of the companies adopt a stance based on an expectation that companies will comply with regulatory requirements at all times both in spirit as well as the letter of the law.

This approach has met with the general but not uniform agreement of all companies on all issues at all times but remains a preferred stance.

The Ring Fence Approach

Insurance regulation in Australia has historically been structured on a ‘ring fence’ basis. That is, the regulatory structure and approach is based on the underlying proposition that the company can be contained within itself if it comes under duress. This approach has been included in the design of Australian legislation and is reflected in our attitudes to the interaction of the company with external parties (whether part of the same group or otherwise).

Over time, there has been debate as to the merits of the ring fence approach although the practitioners believe that the ‘fence’ is sufficiently robust. This approach has implications for the potential structure and approach for Extending the ring fence, for example, would result in some matters, including the ultimate responsibilities of directors and the sanctions on companies, raising concerns with most companies.

 A little info about author :-

Kevin Kees, a professional writer, specializes in finance & Loan,automated solutions Services, Software, Technology, Technology Services . He recommends you Lifeshield.I do write articles, scripts, books and other materials for clients.

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