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ARTICLE · 20 AUGUST 2004

Potts Report Proposes Further Insurance Reforms

Clayton Utz
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Treasury released the long awaited Potts Report into the regulation of Direct Offshore Foreign Insurers and Discretionary Mutual Funds on 27 May 2004. The Report recommends that DOFIs marketing insurance in Australia should remain exempt from prudential regulation in Australia if they are domiciled in a country with comparable regulation.

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Article by Fred Hawke and Ray Giblett

Key Points

  • Treasury released the long awaited Potts Report into the regulation of Direct Offshore Foreign Insurers and Discretionary Mutual Funds on 27 May 2004.
  • The Report recommends that DOFIs marketing insurance in Australia should remain exempt from prudential regulation in Australia if they are domiciled in a country with comparable regulation.

    • The problem

    The Potts Report was commissioned as a response to the HIH Royal Commissioner's observations on Direct Offshore Foreign Insurers ("DOFIs") and growing concern over the protection of less "sophisticated" parties seeking cover from DOFIs.

    Foreign insurers can currently sell insurance to Australians directly, or via insurance agents or brokers licensed in Australia, without establishing a subsidiary or branch in Australia. Such foreign insurers are known as DOFIs and escape the provisions of the Insurance Act.

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