The Australian Prudential Regulation Authority (APRA) has today released its final general insurance refinements package following extensive industry consultation over the past year.

The finalised package includes a response paper, prudential standards and prudential practice guides.

The key refinements are:

• recognition of five different categories of insurer, with modifications to the prudential framework tailored to the risk profiles of the categories; and
• changes to APRA's capital requirements in relation to foreign reinsurance and also to equity and property investments.

The majority of changes will take effect from 1 July 2008 and the reinsurance changes from 1 January 2009.

APRA began work on refinements to the general insurance prudential framework following the Government's announcement on Discretionary Mutual Funds (DMFs) and Direct Offshore Foreign Insurers (DOFIs) in May 2007. The public consultation process for the refinements package began in July 2007.

The response paper addresses key issues raised by industry on the second consultation package released on 19 December 2007. APRA made some significant adjustments to the proposed prudential standards and prudential practice guides in response to submissions and they are explained in the response paper. Two major adjustments relating to foreign reinsurance recoverables and to equity and property investments were announced on 2 April 2008.

APRA Member Mr John Trowbridge said: 'The release of this package represents the culmination of almost twelve months of formal and informal consultation with the general insurance industry. APRA thanks the industry for its active participation in the consultation process and for the valuable contributions that have led to a well-balanced package of refinements to APRA’s general insurance prudential framework.'

The standards and response paper are available on APRA's website at: www.apra.gov.au/General/Refinements-to-the-General-Insurance-Prudential-Framework-June-2008.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 $3 trillion in assets for 21 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 3384  

Mobile: 0417 528 660

All other inquiries:
APRA Contact Centre 1300 131 060.