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.