APRA to allow insurers transition to higher capital standards
The Australian Prudential Regulation Authority (APRA) has signaled it will consider allowing insurers time to transition to new capital standard arrangements scheduled to come into force next year.
The regulator this week released a set of draft prudential standards covering the new arrangements, but noted the likelihood that some insurance companies might encounter difficulties meeting the new requirements.
"APRA notes that a number of insurers are likely to seek transition arrangements," it said.
"This may be to provide insurers time to address a material increase in their minimum capital requirements, or to address the changed requirements for quality of capital."
It said that if an insurer was unable to implement changes to its current operations or arrangements to mitigate the impacts before 1 January, next year, APRA would consider allowing transition arrangements.
However the regulator said such requests would be determined on a case-by-case basis "and must be supported by compelling arguments and capital projections".
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