Strictly not for publication or broadcast before 1 July 2002

The Australian Prudential Regulation Authority (APRA) has announced that most Australian general insurance companies have been authorised under the General Insurance Reform Act 2001 (the "GI Reform Act"). All general insurance companies must now comply with new Standards, which have been developed in conjunction with the industry over the past three years.

The amending legislation and new Standards substantially upgrade the capital and governance requirements, and have required every general insurer wishing to operate after 30 June this year (around 150 in total) to apply for reauthorisation. APRA has reauthorised most companies under the GI Reform Act which was enacted to strengthen the protection of policyholders.

These general insurers have successfully met the new requirements. APRAs reauthorisation process involved a rigorous assessment of a general insurers situation and business practices and plans. The reforms include significantly increased capital requirements, strong reinsurance management and risk management strategies and processes and greater emphasis on the role of company actuaries.

"The new prudential arrangements impose additional obligations on directors, executives, auditors and actuaries, all of whom need to be fit and proper for their role and conscious of the increased responsibilities they now have," said Mr Graeme Thompson, CEO of APRA. "While no system of regulation can provide an absolute guarantee against an insurer failing, the new regime provides the highest level of policyholder protection as it significantly raises both capital adequacy and corporate governance standards."

In addition, APRA imposed formal conditions on nine general insurers that have capital transition plans, which allow them to bring their capital positions into line with APRAs requirements over the next two years.

Earlier in the year, APRA notified a number of general insurers that it considered they could not meet the new requirements. These insurers were inadequately capitalised or were otherwise unable to satisfy APRAs authorisation criteria. Most have since received capital injections or improved their risk management. Ten insurers have gone into run-off ( ie no longer writing new policies or renewing existing policies) as a result of this process. Another 15 general insurers have transferred their liabilities and exited the market during the reauthorisation period. However, most of these exits were a result of existing insurance groups adjusting their corporate structures.

"Australians will have a greater sense of security in their insurers with the successful introduction of these reforms," said Mr Thompson.

APRA will enforce the new Prudential Standards by continuous monitoring of information and statistics, conducting consultations with management, and through on-site reviews of each insurers risk management systems. Recent budget increases have allowed APRA to establish a specialist insurance risk team to supplement its existing front-line supervisory teams.

Further information on the reforms is available on the APRA website at http://www.apra.gov.au/General/General-Insurance-Reforms.cfm

A list of authorised insurers also is available on the APRA Website.

For further information:	Media Enquiries only:
APRA Call Centre	Pauline Hayes
1300 131 060	APRA - Public Affairs
	02 9210 3143
	0417 528 660

"The importance of an insurance industry which balances stability and affordability has come to the fore in recent months as we have all become even more acutely aware of the importance of insurance to our daily lives. The General Insurance Reforms that the Government has introduced will deliver the highest level of prudential protection for Australian consumers. This is one of the concrete steps that this Government has taken to stabilise the Australian insurance industry." Senator Helen Coonan, Minister for Revenue and Assistant Treasurer

Industry

"The Insurance Council welcomes the introduction of the new legislation and congratulates APRA on the extensive consultation process which has given the insurance industry an opportunity to create a worlds best practice model. The end result is better protection for insurance customers," Alan Mason, Executive Director, Insurance Council of Australia.

"Insurers have an unparalleled chance to demonstrate their capacity to be responsive to the needs of the Australian community. The reforms that APRA has delivered are world-class with long term benefits for Australias insurance industry and policyholders," Raymond Jones, Managing Director QBE Insurance (Australia) Limited and President, Insurance Council of Australia.

"Zurich is an enthusiastic supporter of the APRA reforms and we were an early adopter of the reform process. While the process has been a rigorous one in many respects for insurers, it will result in considerable benefits to consumers and business, particularly in improving transparency within the industry." - John Butler, chief executive officer, Zurich Financial Services Australia.

"APRA's reforms raise the bar for companies entrusted with Australia's insurance risk. Those that can meet the higher standards will be stronger and their customers better served," Murray Nugent Managing Director, Reward Insurance Limited

"It is encouraging to see the positive steps taken by APRA, not only in the introduction of the new prudential standards, but more importantly, their approach in establishing a closer partnership with the industry. This will no doubt be a benefit for insurers by enhancing their profile with consumers," Carl M Nagle, Vice President - Asia Pacific, Combined Insurance Company of Australia.

"Insurance Australia Group welcomes any positive moves in the current environment in which the industry is operating to strengthen public confidence in insurance as an essential community product. This is a good first step," Ian Brown, Deputy Chief Executive Officer, Insurance Australia Group.