The Australian Prudential Regulation Authority (APRA) today released for industry comment draft criteria for distinguishing self-help friendly societies for the purpose of applying actuarial standards under the Life Insurance Act 1995 (the LIA).

In April 2000, the Life Insurance Actuarial Standards Board issued a Discussion Paper, The Harmonisation of Actuarial Standards under the Life Insurance Act 1995. The paper recognises and supports the continuation of the unique nature of traditional friendly societies through a distinction between friendly societies which are self-help entities and those which are not.

Existing friendly societies which do not fall into the category of self-help entities will be required to comply with a set of standards for capital, reporting and disclosure which are harmonised with obligations on all life insurance companies registered under the LIA. Less onerous standards will apply to self-help entities given their different risk profile and obligations.

It is the responsibility of APRA to issue a Prudential Rule setting out the criteria it intends to use in exercising its powers under the LIA. The Prudential Rule will be used to determine whether an existing or new entity is a friendly society for the purposes of the Act and, if so, if it is a self-help entity.

This document aims to outline APRAs current draft views for consultation on the criteria that will be contained in the Prudential Rule. APRA will review the application of the criteria after receiving comments, with a view to refining criteria before issuing the final Prudential Rule. Comments on this draft are invited by 30 September 2000. A copy of the draft criteria can be found on the APRA web site.

Comments in writing can be made to:

Mr Brian Gray
Executive General Manager
Policy, Research and Consulting
Australian Prudential Regulation Authority
GPO Box 9836
Sydney NSW 2001

OR Email: friendly.societies@apra.gov.au