Regulatory policy

APRA defines its supervisory policy and priorities – Regulation and government – Insurance News

The Australian Prudential Regulation Authority (APRA) has released its policy and oversight priorities for the next 12-18 months.

With regard to general insurance, APRA’s policy priorities paper indicates that next year the prudential regulator plans to review and update guidance for general insurers on product design, underwriting and risk management in Prudential Practice Guide GPG 240 Insurance Risk (GPG 240) and Reinsurance Risk (GPL 240).

“The intent of this review is to ensure that a consistent standard of insurance risk management is maintained across these industries, following observations and oversight actions over the past several years,” the document states.

According to APRA, for the first half of this year, consulting with industry on incorporating the new AASB 17 accounting standard to align with the regulator’s general insurance capital standards is a key priority.

It expects industry feedback on the draft standards, as well as contributions to a quantitative impact study by March 31. APRA expects to publish the final standards in the second half of the year before they begin in July next year.

APRA says its insurance-related oversight priorities will focus on how the industry addresses the availability, affordability and sustainability of consumer offerings.

“It is clear that in a number of areas individuals and businesses are finding it increasingly difficult to acquire adequate and sustainable insurance coverage at an affordable price,” said the Priorities Briefing Paper. supervision of the APRA.

“In helping to solve this complex problem, APRA is working to ensure that an appropriate balance is maintained between insurance sustainability and access to affordable, well-designed insurance products for consumers.”

APRA Chairman Wayne Byres said the regulator’s priorities for 2022 are designed to address the current risks facing regulated entities, while ensuring they are well prepared for future challenges.

“While the financial system has demonstrated its resilience throughout the pandemic, Covid-19 has underscored the potential for unexpected shocks to emerge at any time,” he said.

“With this in mind, an important priority of our policy and oversight program this year is to strengthen the ability of entities to withstand shocks, whether financial or operational.”

Click here for the Policy Priorities Backgrounder and here for the Oversight Priorities Backgrounder.