Control of the Australian life insurance industry: An example of regulatory externalities within the Australian financial sector 1870-1945

The regulatory environment in which the Australian life insurance industry operates has its antecedents in the two major periods legislative intervention. The first occurring in the 1870s established the principle of 'freedom with disclosure' which has formed the basis of the regulatory approach since. The second in the 1940s refined the concept in the context of a general recognition of an interventionist approach to financial markets. It is argued that regulation of the life insurance market in Australia came about not in response to problems associated with market failure but in reaction to external influences not directly related conditions in the Australian life insurance industry. This has impacted on not only the timing of intervention but the approach taken.