On 1 July 1999, friendly societies were transferred to the Commonwealth prudential regulation regime through modifications to the LIA. At the same time, the actuarial standard-setting body under the LIA, the Life Insurance Actuarial Standards Board (LIASB) released a set of transitional actuarial standards for friendly societies that largely reinstated the requirements of the pre-existing regime.

The transitional standards were to be replaced by harmonised actuarial standards for all life companies and friendly societies by the end of a reasonable transition period, generally taken to be 1 July 2001. In April 2000, the LIASB issued a Discussion paper entitled Policy Approach to the Harmonisation of Actuarial Standards under the Life Insurance Act 1995 to commence discussion on the harmonisation process.

Since then, APRA has been working closely with the LIASB and industry to identify issues raised by the proposed the harmonisation of actuarial standards. During this process it became apparent that the issues were broader than just changes to actuarial standards and a more comprehensive approach was needed.

Consequently, over the next 12 - 18 months, APRA will undertake a review of the LIA. APRA recognises the LIA was comprehensively modified in 1995 and is widely regarded as among the most sophisticated in the world. It is not APRAs intention to overhaul the fundamental requirements of the Act, but instead to determine the best way of integrating life company and friendly society requirements, and of harmonising the structure of the LIA with APRAs other legislative regimes. The opportunity will also be taken to ensure compliance with the International Association of Insurance Supervisors (IAIS) principles for effective supervision and to shift from prescriptive legislative provisions to flexible standards.

There will be full consultation with industry before any changes are made.

The LIASB will continue in the short term with its work to harmonise actuarial standards, where appropriate, but will retain the current distinction within the industry between the structure of friendly societies and other life companies.

For further information contact:

Gloria Peterson
Public Affairs Manager
02 9210 3385 or 0419 250 286