Treasury ignores pleas for DOFI delay
The Federal Government has rejected NIBA’s call for a delay in the introduction of the direct offshore foreign insurer (DOFI) legislation, which is due to come into effect on July 1.
NIBA CEO Noel Pettersen issued a strongly worded response to last Tuesday’s Government announcement of the DOFI exemptions.
In a letter to Assistant Treasurer Chris Bowen he again called for a three-month deferral of the regulations to October 1, and reiterated NIBA’s support for a premium test, which has been excluded from the proposed exemptions.
“Not only do the proposed exemption arrangements ignore the request from insurance brokers to be given reasonable time to put in place the necessary administrative arrangements but they are also far more cumbersome and unwieldy than they need to be,” Mr Pettersen wrote.
But the Manager of the Treasury’s Insurance Access and Pricing Unit, Vicki Wilkinson, has flatly rejected the need for any further delays, saying the Government has kept stakeholders informed at all stages of the process.
“NIBA has been fully involved throughout the entire period,” Ms Wilkinson told insuranceNEWS.com.au. “The paper went out towards the end of last year and the regime will commence on July 1.”
Ms Wilkinson says Treasury listened to submissions for and against a premium test before deciding against its inclusion in the first high-value insured “limb” of the three-limbed exemption regime.
“NIBA made strong representations about the premium test and other stakeholders made equally made strong representations against it,” she said. “The high-value insured is designed to be used as a proxy for sophistication, and the usefulness of a premium test as a proxy is less strong.”
But she emphasised premium levels can still come under consideration in the third limb, which covers customised risks.
“The fact that the premium test is not included does not mean that premium is not a consideration,” Ms Wilkinson said. “Premium could be considered as an element of the third limb.”
Mr Pettersen says the regulations will require brokers to make major adjustments to computer systems to generate the data Treasury plans to monitor on a regular basis with a view to refining the exemptions.
“A more balanced approach to the exemption arrangements is necessary; one that involves low cost administration with simple procedures and a ready access to overseas markets for difficult to place risks.”
NIBA CEO Noel Pettersen issued a strongly worded response to last Tuesday’s Government announcement of the DOFI exemptions.
In a letter to Assistant Treasurer Chris Bowen he again called for a three-month deferral of the regulations to October 1, and reiterated NIBA’s support for a premium test, which has been excluded from the proposed exemptions.
“Not only do the proposed exemption arrangements ignore the request from insurance brokers to be given reasonable time to put in place the necessary administrative arrangements but they are also far more cumbersome and unwieldy than they need to be,” Mr Pettersen wrote.
But the Manager of the Treasury’s Insurance Access and Pricing Unit, Vicki Wilkinson, has flatly rejected the need for any further delays, saying the Government has kept stakeholders informed at all stages of the process.
“NIBA has been fully involved throughout the entire period,” Ms Wilkinson told insuranceNEWS.com.au. “The paper went out towards the end of last year and the regime will commence on July 1.”
Ms Wilkinson says Treasury listened to submissions for and against a premium test before deciding against its inclusion in the first high-value insured “limb” of the three-limbed exemption regime.
“NIBA made strong representations about the premium test and other stakeholders made equally made strong representations against it,” she said. “The high-value insured is designed to be used as a proxy for sophistication, and the usefulness of a premium test as a proxy is less strong.”
But she emphasised premium levels can still come under consideration in the third limb, which covers customised risks.
“The fact that the premium test is not included does not mean that premium is not a consideration,” Ms Wilkinson said. “Premium could be considered as an element of the third limb.”
Mr Pettersen says the regulations will require brokers to make major adjustments to computer systems to generate the data Treasury plans to monitor on a regular basis with a view to refining the exemptions.
“A more balanced approach to the exemption arrangements is necessary; one that involves low cost administration with simple procedures and a ready access to overseas markets for difficult to place risks.”