The Australian Prudential Regulation Authority (APRA) today issued a statement outlining its response to the Government’s announcement ‘Enhancing the Integrity of Insurance in Australia’ relating to direct offshore foreign insurers (DOFIs) and discretionary mutual funds (DMFs).
The Government’s proposed amendments to the Insurance Act 1973 mean that DOFIs will need to become authorised by APRA to carry on business in Australia. There will be some limited exemptions where the capacity of the Australian insurance market does not meet the full needs of large or specialised buyers of insurance.
APRA will also be required to collect data from DMFs.
APRA Member Mr John Trowbridge said the proposed amendments are consistent with APRA’s principles-based approach to prudential standards for insurers that aims to maintain adequate protection for policyholders while applying prudential standards which reflect the nature of different categories of insurers, including DOFIs.
"Policyholder protection will be extended by the requirement for DOFIs to become authorised if they wish to continue to offer insurance cover in Australia. At the same time, APRA will modify the current prudential framework so that it is clear how it applies to different categories of insurers according to their risk profiles,” Mr Trowbridge said.
“This approach will streamline the regulation of categories of insurers posing a lower risk and give added clarity to all insurers, including DOFIs. Insurers therefore stand to benefit from a prudential framework that will be more transparently suited to their own circumstances without prejudicing the protection of policyholders."
APRA will publish a discussion paper and consult with the insurance industry and other interested parties, as part of the development of the modified framework that is intended to apply from 1 July 2008.
APRA’s statement on DOFIs and DMFs can be viewed at www.apra.gov.au/General/upload/APRA-statement-on-DOFIs-DMFs-FINAL-03May07.pdf.
The statement from The Hon Peter Dutton MP, Minister for Revenue and the Assistant Treasurer, can be viewed at http://assistant.treasurer.gov.au/pcd/default.asp.
APRA’s prudential standards for general insurance companies can be viewed at www.apra.gov.au/General/General-Insurance-Prudential-Standards-and-Guidance-Notes.cfm
The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the financial services industry. It oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, friendly societies, and most members of the superannuation industry. APRA is funded largely by the industries that it supervises. It was established on 1 July 1998. APRA currently supervises institutions holding approximately $2.5 trillion in assets for 20 million Australian depositors, policyholders and superannuation fund members.
Media and industry inquiries only:
Andrew McCutcheon, Public Affairs Manager
Australian Prudential Regulation Authority
Telephone: 02 9210 3143
Mobile: 0417 528 660
All other inquiries:
APRA Contact Centre 1300 131 060
