The Australian Prudential Regulation Authority (APRA) has issued a prudential framework for the supervision of general insurance groups that are domiciled in Australia.
The framework consists of three prudential standards, a revised prudential standard and a response paper addressing submissions received from the general insurance industry in relation to a consultation package released in April. It comes after three years of consultation with industry on general insurance group supervision.
The requirements apply to all general insurance groups in which the parent entity of the group is an APRA-authorised general insurer or an APRA-authorised non-operating holding company.
These standards will allow APRA to implement recommendations 38 and 39 of the HIH Royal Commission in relation to general insurers that act as part of a corporate group.
They will also enable APRA to meet the requirements of the International Association of Insurance Supervisors, which requires supervisors to supervise general insurers on both a group basis and solo basis. They will come into effect in March.
“With these new standards, APRA is aiming to ensure insurance groups are financially sound and that group interrelationships do not compromise the financial soundness of individual APRA-authorised insurers within the group,” said APRA executive member John Trowbridge.
