The Chief Executive Officer of the Australian Prudential Regulation Authority (APRA), Graeme Thompson, said today, APRA welcomes the Governments announcement of a Royal Commission into the HIH collapse. An inquiry of this kind should provide the most effective means of public accountability for all parties associated with HIH, including APRA. While it will be costly for APRA and mean shifting resources from our supervision budget, we will cooperate fully with the Royal Commission. Mr Thompson noted that APRA had been the focus of considerable public questioning and criticism since HIH was placed in provisional liquidation in mid March. He said, We fully understand and accept the publics close interest in APRAs role as prudential supervisor of HIH over the past couple of years, and in the framework for supervision of general insurers that we inherited. We are pleased to have an opportunity to explain these matters in detail.
Mr Thompson said that, in connection with HIH, APRAs priorities now are:
- to continue working with the Government and industry on establishing the protection arrangements for certain classes of HIH policyholders;
- to work with the provisional liquidator to help secure the best long-run recovery from the company;
- to cooperate fully with ASIC in its investigation into possible offences under the Corporations Law;
- to review its internal supervisory processes, identify any necessary improvements and implement those.
Most important for the longer-term, APRA also plans (subject to passage of the necessary legislation) to introduce as quickly as possible its new prudential supervision framework for general insurers.
This framework, a major APRA project over the past two years, will reduce significantly the likelihood of another HIH-like event and put Australia at the forefront of international practice in supervising general insurers. Further detail of this can be found on the APRA website (www.apra.gov.au/policy).
Until the Royal Commission commences, APRA will not be making further comment on its supervision of HIH.
For further information contact:
Gloria Peterson
Public Affairs Manager
02 9210 3385 or 0419 250 286
