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DOFI and DMF bill to be debated

Legislation on how direct offshore foreign insurers (DOFIs) and discretionary mutual funds (DMFs) will be regulated by the prudential regulator has been introduced into Federal Parliament.

However, the Financial Sector Legislation Amendment Bill 2007 will not be debated by the House of Representatives until Parliament returns from the winter recess on August 7.

Under the bill, foreign insurers providing general insurance products in Australia directly or through a broker or insurance agent must be authorised by the Australian Prudential Regulation Authority (APRA).

Assistant Treasurer Peter Dutton says Australia will continue to welcome well-managed foreign insurers.

“Exemptions from these arrangements will be developed in close consultation with stakeholders, enabling Australia’s largest businesses and those unable to obtain appropriate cover domestically to access the world insurance market.

“This will mean that Australian businesses can continue to insure their business risks and will encourage domestic insurers to provide innovative products that meet the needs of Australian consumers and businesses.”

As part of the bill, DMFs will be subject to rigorous and compulsory information collection, to enable government, regulators and industry to better understand their use and operation.

Within three years of the start of this collection, the Government will review the operation of DMFs to determine whether prudential regulation is necessary.