The Australian Prudential Regulation Authority (APRA) has released a response letter following its consultation on remaking four life insurance prudential standards due to sunset on April 1.
In the letter, APRA confirmed its intention to remake the prudential standards without any amendments prior to the sunsetting date, after its assessment found that they “continue to be broadly fit for purpose and are a required part of the prudential framework.”
The following life insurance prudential standards were part of APRA’s consultation:
The consultation period ran from November 21, 2022, to December 1, 2022. In that time, APRA received two submissions, with one coming from Resolution Life.
According to APRA, both respondents agreed with its assessment that the four standards “remained broadly fit for purpose.”
The consultation also yielded a few suggestions regarding technical modifications to LPS 360, which APRA decided not to incorporate “at this stage.”
However, the regulator said it will “consider these further when reviewing the insurance prudential framework as part of its strategic initiative to Modernise the Prudential Architecture (MPA).”
“APRA will continue to engage and consult with Industry on the MPA programme,” said APRA executive director Clare Gibney in the response letter.
Last month, APRA executive board member Suzanne Smith delivered a speech to the Members Health Directors’ Professional Development Program and revealed the regulator’s key priorities for the private health insurance sector in 2023, which included a plan to continue bolstering the industry’s financial resilience and long-term sustainability amid increasing pressure on affordability.
“Higher inflation, interest rates, and workforce constraints put pressure on the costs of providing healthcare and on household budgets – pressures which could see those sustainability risks increase once more,” said Smith.
She also discussed APRA’s efforts to improve cyber resilience through intensifying supervision of entities that do not meet its Information Security Prudential Standard CPS 234, following the Medibank cyberattack.
“Considering the high concentration risk among critical service providers in PHI, boards must have strong governance processes in place to adequately monitor outsourced services, seek independent assurance on the effectiveness of key outsourcing controls, and a contingency plan if these arrangements fall over,” Smith added.
