These changes came into effect on 1 January 2008. They 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 was to maintain the ‘status quo’.
Two new prudential standards ensure that key provisions relating to actuaries, auditors and reinsurance continue to operate (LPS 230 Reinsurance and LPS 310 Audit and Actuarial Requirements):
- APRA incorporated 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 were revoked as a result of this change;
- the SRR Act removed 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 Fit and Proper; and
- two pre-existing prudential standards for friendly societies relating to actuarial advice (PS1) and approved benefit fund requirements (PS2) have been revoked and incorporated into LPS 310.
The SRR Act transferred the responsibility for actuarial standards from the Life Insurance Actuarial Standards Board (LIASB) to APRA.
- As a result, these actuarial standards were reissued as APRA prudential standards to ensure their continued operation.
Minor changes were made to LPS 520 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 Institute of Actuaries of Australia (unless there are exceptional circumstances, and APRA agrees).