Offshore insurers made to answer
So-called Discretionary Mutual Funds (DMFs) are to be subject to stricter reporting standards to the Australian Prudential Regulation Authority (APRA).
The regulator announced this week that it had developed the final reporting requirements that would be applied to DMFs consistent with the passage of the Financial Sector Legislation Amendment (Discretionary Mutual Funds and Direct Offshore Foreign Insurers) Act earlier this year.
The legislation was enacted by the Commonwealth in a bid to bring DMFs more into line with Australian-domiciled insurance companies.
APRA described DMFs as being entities that offer discretionary cover, “That is, an insurance-like product that may involve an obligation on the DMF to consider meeting a claim made on it, but gives the DMF a discretion as to whether it will pay the claim”.
It said that because of their discretionary nature, DMFs were not insurance companies and, therefore, not required to be authorised by APRA.
APRA member John Trowbridge said DMFs would now be subject to a compulsory data collection.
“APRA has developed reporting proposals which are designed to enable their operations and financial structure to be better understood,” he said.
AUTHOR
Mike Taylor
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