By using this site you are deemed to have read and acknowledged our disclaimer.

APRA is introducing new and amended prudential standards, including actuarial standards, for life insurers and friendly societies. These result from amendments to the Life Insurance Act 1995 (Life Insurance Act) made under the Financial Sector Legislation Amendment (Simplifying Regulation and Review) Act 2007 (SRR Act).

Click here to download a zip file containing the new and amended prudential standards.

These changes will come into effect on 1 January 2008. They seek to reproduce the removed sections from the Life Insurance Act and ensure that the prudential framework for life companies continues as intended.

In general, and apart from some specific instances outlined below, the approach taken by APRA is to maintain the ‘status quo’.

• Two new prudential standards will ensure that key provisions relating to actuaries, auditors and reinsurance continue to operate (LPS 230 Reinsurance and LPS 310 Audit and Actuarial):
  
• • APRA is incorporating into LPS 230 two pre-existing prudential rules relating to the reporting of reinsurance arrangements (PR 23) and reinsurance contracts requiring approval (PR 24). These two rules will be revoked as a result of this change; 
    
    
  • the SRR Act removes the requirement in the Life Insurance Act for APRA to approve auditors - LPS 310 does not re-instate this requirement;
    
    
  • paragraph 22 in LPS 310 defines the income and outgoings of statutory funds for the purpose of section 47 of the Life Insurance Act (the definition was previously in the Life Insurance Regulations 1995); 
    
    
  • the criteria for the appointment of auditors and actuaries under LPS 310 are now aligned with the criteria in LPS 520; and 
    
    
  • two pre-existing prudential standards for friendly societies relating to actuarial advice (PS1) and approved benefit fund requirements (PS2) have been incorporated into LPS 310. PS1 and PS2 will therefore be revoked.
    
    
• The SRR Act transfers the responsibility for actuarial standards from the Life Insurance Actuarial Standards Board (LIASB) to APRA.
  
• • As a result, these actuarial standards will be reissued as APRA prudential standards to ensure their continued operation.
    
    
• Minor changes are being made to LPS 520 Fit and Proper and LPS 510 Governance to re-align references to the revised Life Act:
  
• • the revised LPS 510 is now consistent with GPS 510 Governance in that members of the Board Audit Committee must all be directors of the company;
    
    
  • LPS 510 is also being made consistent with the changes APRA consulted on in Sept 2007 following changes to the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations; 
    
    
  • the revised LPS 520 also stipulates that an actuary must be a Fellow or Accredited Member of the IAAust (unless there are exceptional circumstances, and APRA agrees).