Draft prudential package released for life insurance industry
John Trowbridge
The Australian Prudential Regulation Authority (APRA) has released for consultation a package of draft prudential standards and guidance for the life insurance industry that it hopes will bring the industry into line with other APRA-regulated industries.
The package consists of a discussion paper, as well as draft standards and prudential guides on risk management. The draft prudential practice offers guidance on asset and liability management, conflicts of interest under Section 48 of the Life Act, operational risk and insurance risk, and reinsurance management. A draft prudential standard and prudential practice guide on business continuity is also included in the package.
“The draft prudential standards will provide clarity to life companies about APRA’s minimum expectations for risk management and business continuity management and promote the continuing soundness of the life insurance industry. Sound risk management practices benefit all stakeholders and help maintain public confidence in the industry,” APRA member John Trowbridge said.
According to Trowbridge, many of the requirements in the draft prudential standards will already be part of the practices of prudently run life insurance organisations.
“The proposals are in line with APRA’s aim of moving towards consistency of the principles underpinning the prudential frameworks of all APRA-regulated industries. While differences in detail are necessary in recognition of the differing structures of the various industries, ordinarily principles should be consistent so that like risks are regulated in like manner,” Trowbridge said.
According to APRA, the draft prudential standards will enable institutions to develop their own approaches to best suit their particular businesses.
Comments on the discussion paper, draft standards and draft prudential practices are invited by December 31, 2006.
AUTHOR
Recommended for you
Policy and advocacy specialist Benjamin Marshan has left the Council of Australian Life Insurers after less than a year, having joined in March from the Financial Planning Association of Australia.
The declining volume of risk advisers meant KPMG has found a rising lapse rate for insurance policies arranged by independent financial advisers, particularly in the TPD and death cover space.
The Life Insurance Code of Practice has transferred from the Financial Services Council to the Council of Australian Life Insurers.
The firm has announced it will no longer be writing new life insurance policies in the retail advised and corporate group insurance channels, citing a declining market and risk adviser numbers.
