Twenty general insurers have disappeared from the local insurance scene from today following the Australian Prudential Regulation Authority's (APRA) unveiling of its new list of authorised insurers. Australia’s authorised insurers have dropped from 146 last Friday.

Some insurers have voluntarily handed back their licences and ceased trading on Friday. APRA CEO Graeme Thompson said the regulator informed a number of insurers earlier this year that there were doubts about their ability to operate under the General Insurance Reform Act, which came into effect today. Most received cash injections or “improved their risk management”, he said.

“APRA has at this stage restrained five of these general insurers from writing new policies or renewing existing policies. Another 15 have transferred their liabilities and exited the market during the re-authorisation period.”

Examples are Australian Family Assurance, which will continue in the market as an underwriting agency. Like the other companies which have voluntarily ceased trading, AFA will also administer its run-off business. Another is Key Insurance, which sold to Australian Unity in December. Some, like AMP General, have been de-authorised because they are no longer carrying on business.

APRA did not specifically identify the companies whose authorisations have been revoked. One insurer which is still authorised on APRA’s list – understood to be Rural & General Insurance (R&G) – has appealed against APRA’s decision to not re-authorise it. An APRA spokesman declined to discuss the matter, citing an appeal before the Administrative Appeals Tribunal. APRA documentation shows that R&G will work under the terms of the old Insurance Act in the meantime, and also remains on the list of “authorised” businesses.

In March R&G was prevented by ASIC from raising $5 million through an offer information statement (OIS) which offered shares to its insurance clients at 50 cents a share. ASIC concluded that the OIS omitted important information and contained “potentially misleading or deceptive information”.

The insurers “only authorised to conduct run-off business” which stopped trading this year are: ADFA Insurance; AMP General; American International Assurance; Australian Family Assurance; Boral Insurance; Dentists Sickness and Accident Insurance; HSB Engineering Insurance; Lionheart Insurance; and PMI Indemnity.

Those insurers which have had their licences revoked – most of which involved corporates doing some housekeeping and/or moving to absorb the capital impact on subsidiary companies – are: GE Capital Insurance (Australia); Mercantile Mutual Insurance (Workers’ Compensation); NTI Limited; RACI Pty Ltd; Transport Industries Insurance; and Western QBE Insurance Limited. Some companies are still in run-off after handing in their licences up to 17 years ago.