​Targeted adjustments to the general insurance reinsurance framework

Executive Summary

The Australian Prudential Regulation Authority (APRA) is updating the general insurance reinsurance framework to enhance access to alternative reinsurance arrangements while safeguarding policyholder interests. These reforms reflect APRA’s commitment to supporting a resilient and adaptable insurance sector by improving the prudential framework’s responsiveness to evolving market conditions and reinsurance practices, while also streamlining regulatory processes.

When APRA commenced this review, the reinsurance market was under significant pressure, prompting early proposals aimed at facilitating better access to alternative insurance. These proposals were communicated via a consultation letter in November 2024.¹ These initial proposals were exploratory only, designed to prompt early conversations with industry and test ideas. Industry feedback has been crucial in shaping this work.

Reinsurance market conditions have now eased, but APRA remains focused on future-proofing the prudential framework to ensure it supports insurers’ flexibility to access a broader range of reinsurance solutions. After carefully considering stakeholder feedback from the initial consultation, APRA has refined its proposals. The revised proposals reflect insights gained through consultation, with some elements refined, others adjusted, and certain ideas not carried forward where they were considered unlikely to effectively deliver the intended outcome. These revised proposals are being considered with a view to supporting insurers when market conditions tighten again.

APRA is now seeking feedback on the following:

• Adjusting reinstatement requirements: In November 2024, APRA suggested lowering the return period for which reinstatement is required and considered removing the requirement for reinstatement premium to be held in the natural perils vertical requirement and other vertical requirements of the Insurance Concentration Risk Charge (ICRC). Following industry feedback regarding how alternative reinsurance may be utilised, APRA has refined its position and now proposes removing reinstatement requirements for reinsurance arrangements where reinstatements are typically unavailable, like catastrophe bonds, to improve access to alternative forms of reinsurance.
• Determining the capital treatment of single peril reinsurance: It was suggested in November 2024 that insurers be permitted to calculate the 1-in-200 year loss for the largest single peril and buy all perils reinsurance to that level. Following industry feedback regarding possible unintended consequences of this suggestion, APRA is proposing a different approach to addressing challenges associated with determining the capital treatment of single peril reinsurance. It is proposed that insurers be directed to use the net whole-of-portfolio approach for reinsurance that covers single perils, making capital benefit calculations feasible for such arrangements. The proposal is for this method to be mandatory for non-whole-portfolio coverage.
• Reducing the need for APRA approval: To ease regulatory burden, APRA proposes to categorise reinsurance arrangements by complexity, enabling the Appointed Actuary to determine capital treatment for certain arrangements without APRA approval, while more complex arrangements will still require APRA oversight. This expands on a technical refinement proposed in November 2024.
• Technical refinements and reporting updates: APRA proposes to fine-tune the prudential framework by implementing technical improvements to promote clarity and consistency. The proposals are consistent with those shared in November 2024. Changes are also proposed to reporting forms to reflect changes in prudential standards.

APRA considers these proposals will facilitate better access to cost-effective reinsurance. In turn, this may help ease affordability pressures through the cycle, reduce regulatory burden and improve efficiency by streamlining existing regulatory processes while enhancing transparency and consistency across the industry. APRA recognises that while these measures are an important step, addressing broader insurance affordability challenges will require consideration of a range of factors beyond the scope of prudential regulation.

Feedback on draft prudential standards, prudential guidance, and reporting standards is invited. Please submit written responses by 30 January 2026. Subject to the feedback received through this consultation, APRA is aiming to release final versions of the prudential standards, guidance and reporting standards in H1 2026. It is proposed that these changes would come into effect on 1 January 2027. Ahead of these proposed changes, insurers are welcome to engage with APRA regarding the use of alternative forms of reinsurance under the current framework.

Glossary

1. Facilitating access to reinsurance and fine-tuning the prudential framework

1.1 Rationale for policy changes

1.1.1 Reflecting an evolving market

Reinsurance provides significant benefit to Australian insurers and therefore policyholders. It provides stability to the industry by assisting insurers to manage risk and meet capital requirements. APRA is modernising aspects of the general insurance (GI) prudential framework to reflect the evolving nature of reinsurance, characterised by the increasing prevalence of alternative reinsurance.

Alternative reinsurance includes variations on traditional reinsurance products, as well as catastrophe bonds and other types of Insurance Linked Securities (ILS) and allows insurers access to capital markets to offset insurance risk, in addition to more traditional reinsurance markets.

Parts of the current prudential framework can complicate access to certain types of reinsurance, particularly alternative arrangements. APRA aims to facilitate better access to alternative reinsurance without unduly impacting policyholder security.

1.1.2 Facilitating access to cost-effective reinsurance through the cycle

These measures are intended to ensure that the prudential framework does not hinder insurers' access to a diverse range of reinsurance options. Market conditions observed in recent years, characterised by a significant hardening in the reinsurance sector, have underscored the importance of cost-effective reinsurance to ensure the GI industry can continue to manage risk and capital requirements effectively.

1.2 Consultation feedback

In the consultation letter to industry released on 7 November 2024, APRA sought feedback on ways to improve general insurers’ access to reinsurance, including alternative reinsurance arrangements. Feedback was also requested on certain technical refinements to the prudential framework. APRA received 15 submissions. Public submissions are available on APRA’s website. 

While industry feedback was broadly supportive of APRA’s objective of improving access to alternative forms of reinsurance, it questioned whether the proposed changes would effectively deliver the intended outcomes.

• All perils requirement – There was a broad range of views expressed on this proposed adjustment. While some stakeholders supported the change on the grounds of cost efficiency and allowing increased flexibility in reinsurance structuring, others raised concerns about reduced capital adequacy, implementation challenges and its potential impact on the robustness of the current framework.
• Reinstatement requirement – Responses were generally supportive, with stakeholders welcoming increased flexibility in accessing alternative capital and better alignment with international practices, while emphasising the need to maintain adequate protection against catastrophic events.
• Reinstatement premium requirement – Feedback was mixed, with some stakeholders supporting the change as a way to reduce capital complexity and gain greater flexibility in structuring reinsurance programs. Others preferred to retain the existing requirement, citing concerns that its removal could increase systemic risk if insurers under-provide for reinstatement costs and reduce guaranteed post-event protection.
• Technical refinements to the framework – Stakeholders were broadly supportive of the proposed technical amendments, particularly the expanded role of the Appointed Actuary and reducing referrals to APRA, with minor clarifications raised.

Through this consultation, APRA gained a clearer understanding of how alternative forms of reinsurance may be used in practice. This insight has informed the development of more targeted revisions that are expected to better meet the objectives of the work.  A detailed summary of consultation feedback and APRA’s responses can be found in Attachment 1.

While APRA’s core aim of enabling better access to alternative forms of reinsurance remains unchanged, the proposals have evolved in response to stakeholder input and a more informed view of industry reinsurance practices. The review began during a period of significant strain in the reinsurance market, prompting APRA to explore a range of preliminary ideas as a basis to initiate dialogue and test potential solutions with industry.

Although market pressures have since eased, APRA is focused on ensuring the framework remains resilient and adaptable over time. The revised proposals outlined in the following section reflect industry feedback and represent a more practical and refined approach, with some ideas adjusted, others set aside, and new options introduced to better align with industry needs. Collectively, these proposals are intended to give insurers more flexibility in structuring reinsurance arrangements, while ensuring ongoing prudential soundness.

1.3 Summary of updated proposals

1.3.1 Improving access through targeted adjustments

The requirement to have a reinstatement inhibits access to certain types of alternative reinsurance arrangements

Reinstatements are not commonly available for alternative forms of reinsurance such as catastrophe bonds. Obtaining a capital benefit from these types of arrangements is not possible under the current framework without referral to APRA, due to the requirement to have a contractually agreed reinstatement.

In the November 2024 letter, APRA’s suggestion to simplify access was to introduce a threshold above which a reinstatement would not be required. Following feedback about the use of catastrophe bonds in the market APRA has adjusted this proposal.

APRA is now proposing that a reinstatement should not be required where such arrangements are typically not available (for example, catastrophe bonds). This proposal more effectively targets current aspects of the prudential framework that inhibit access to alternative reinsurance. The narrower scope of this proposal also reduces the risk of unintended consequences.

Input is sought on draft revisions to Prudential Standard GPS 116 Capital Adequacy: Insurance Concentration Risk Charge (GPS 116) to give effect to this change.

Accommodating single peril reinsurance arrangements is difficult under the current framework

Under the current framework, reinsurance arrangements do not necessarily need to provide protection against all perils or regions, as the net whole-of-portfolio approach outlined in GPS 116 allows for capital recognition of more targeted coverage. APRA expects reinsurance arrangements to provide protection against all perils where practicable, to ensure insurers are adequately protected against a broad range of potential loss events. While traditional reinsurance typically meets this expectation, alternative arrangements such as catastrophe bonds, which generally provide single-peril coverage, currently require APRA review.

Aiming to address this obstacle, APRA’s November 2024 letter sought feedback on a proposal to allow insurers to calculate the 1-in-200 year loss for the largest single peril and buy all perils reinsurance to that level. Consultation feedback was that this proposal would not achieve its intended purpose.

APRA’s updated proposal is to repurpose the net whole-of-portfolio approach in GPS 116. While not originally designed for this purpose, by using this calculation method, insurers would be able to assess the capital benefit of reinsurance where coverage is incomplete, which is often the case for alternative forms of reinsurance. It is proposed that the net whole-of-portfolio approach be mandatory for reinsurance that does not provide cover on a whole of portfolio basis, for example where single peril reinsurance is used.

The net whole-of-portfolio approach differs from the traditional “probable maximum loss (PML) less reinsurance” approach in how reinsurance is applied. The traditional method identifies the worst-case event before reinsurance and then applies the reinsurance program to that single event. This works well when reinsurance applies consistently across all types of catastrophic events. In contrast, the net method applies reinsurance to every simulated catastrophic event first, capturing differences in reinsurance coverage by region or peril, and then determines the largest retained loss at the required probability level.

1.3.2 Enhancing efficiency by minimising APRA approval requirements

In the November 2024 consultation letter, APRA proposed minor changes to the definition of “aggregate reinsurance” and ‘APRA approval of capital benefit of reinsurance arrangements’ as part of a suite of technical refinements. Both these proposals sought to achieve a targeted reduction in the need for APRA approval of the capital treatment of reinsurance arrangements. Recognising the potential for these revisions to enhance efficiency and facilitate access to alternative forms of reinsurance, APRA is now building on its original suggestion regarding expanding the role of the Appointed Actuary (AA) in relation to assessing the capital implications of certain reinsurance arrangements.

Under the current framework, a large number of reinsurance arrangements require APRA approval if an insurer intends to account for these arrangements in its capital calculations. As outlined in the November 2024 consultation letter, reinsurance arrangements are referred to APRA if they are aggregate reinsurance or require an adjustment to capital calculations under Prudential Standard GPS 115 Capital Adequacy: Insurance Risk Charge (GPS 115). These current framework settings capture relatively simple arrangements, meaning a large volume of arrangements are referred.

Ensuring only the most complex arrangements require approval

APRA aims to make the process more efficient by ensuring it is only involved in determining the capital treatment of reinsurance arrangements where complexity means it is prudent to do so. This proposal would reduce the regulatory burden associated with the current approval process. To give effect to this proposal, revisions are proposed to GPS 115, GPS 116 and Prudential Standard CPS 320 Actuarial and Related Matters (CPS 320). Draft changes have also been included in Prudential Practice Guide GPG 116 Insurance Concentration Risk (GPG 116).

For the Insurance Risk Charge (IRC), it is proposed that APRA approval would only be required when the insurer’s proposed capital treatment under GPS 115 impacts the capital assessment under GPS 116. An example of this is a stop-loss arrangement that requires an adjustment to the premium liability risk charge, and this adjustment impacts the reinsurance recoveries in the ICRC. For arrangements where applying the standard approach would result in persistent and material under- or over-statement of the Insurance Risk Charge (for example, Adverse Development Cover), it is proposed that the capital treatment be determined by the AA, thereby reducing APRA’s involvement.

For the ICRC, it is proposed that APRA approval would only be required:

• for arrangements that introduce basis risk between the losses and the reinsurance recoveries except for basis risk in terms of peril coverage or geographic region;
• if the adjustment under GPS 116 would impact the capital assessment under GPS 115; or
• if the AA advises the insurer to make such a referral to APRA.

Examples of these types of arrangements include arrangements with parametric triggers, industry loss warranty, stop-loss or aggregate reinsurance covers that protect against both attritional losses and catastrophic events, where the remaining deductible or limit assumed in the ICRC will depend on the amount of attritional losses and recoveries allowed for under the Premiums Liability risk charge.

It is proposed that the AA determine the capital treatment of most other arrangements. Examples of arrangements where the insurer must seek advice from the AA before determining capital treatment include:

• arrangements with optionality or contingent features such as ‘Top and Drop’ cover that can respond to either a large single event or a series of retained losses from multiple smaller events, depending on which occurs first; and
• arrangements in which the only type of basis risk is related to peril coverage and/or geographic region (for example, a single-peril catastrophe bond covering a specific region with an indemnity-based trigger).

Advice from the AA on capital treatment would not be required for simple reinsurance arrangements basis risk (for example, all-perils and all-region covers) or any optionality or contingent features. Examples include traditional quota-share arrangements and catastrophe excess of loss reinsurance.

For both the IRC and ICRC, it is proposed that APRA be able to deem that the capital treatment of any reinsurance arrangement requires APRA approval. This is a safeguard to ensure APRA has appropriate power to ensure sufficient capital is being held by insurers. APRA may utilise this discretion both before and after a capital treatment is determined.

1.3.3 Fine-tuning the framework

In the November 2024 consultation letter, APRA also proposed a number of technical refinements that aim to address known issues, improve clarity and facilitate greater consistency in the application of the current framework.

These proposals were broadly supported during the first round of consultation. APRA proposes to implement these largely unchanged.

The exceptions to this are the proposals relating to the ‘definition of aggregate reinsurance’ and ‘APRA approval of capital benefit of reinsurance arrangements.’ As outlined above, these proposals have been combined and expanded.

Stakeholder input has informed draft refinements to various prudential standards and guides to give effect to the proposals. Proposed drafting changes are summarised in Attachment 1. Feedback is now being sought on the drafting of these refinements.

1.3.4 Reporting modifications

Updates to the reporting framework are proposed to keep prudential and reporting standards consistent. Proposed changes include updating, renaming, and adding data items.

The newly introduced reporting items align with proposed reforms intended to minimise the requirement for APRA approval of the capital treatment of reinsurance arrangements. Proposed additions aim to give APRA visibility of the capital treatment of certain reinsurance arrangements.

For the new data items in Reporting Standard GRS 115.0 Outstanding Claims Liabilities – Insurance Risk Charge (GRS 115.0), Reporting Standard GRS 115.0.G Outstanding Claims Liabilities – Insurance Risk Charge (GRS 115.0.G), Reporting Standard GRS 115.1 Premium Liabilities – Insurance Risk Charge (GRS 115.1) and Reporting Standard GRS 115.1.G Premium Liabilities – Insurance Risk Charge (GRS 115.1.G), APRA proposes that they are classified as non-confidential alongside the existing items, in line with the confidentiality determinations outlined in APRA’s recent Consultation on GI & LI non-confidentiality determination and statistical publications.² As outlined in this consultation letter, APRA intends to deem specific data points non-confidential as a continuation of the existing confidentiality determination made in 2022. Importantly, despite the proposed non-confidentiality, the new data items would not be included in any of APRA's statistical publications without prior public consultation.

It is proposed the new data items in Reporting Standard GRS 116.0 Insurance Concentration Risk Charge (GRS 116.0) and Reporting Standard GRS 116.0.G Insurance Concentration Risk Charge (Level 2 Insurance Group) (GRS 116.0.G) are classified as confidential, in line with existing confidentiality determinations for the reporting standards.

2. Consultation questions and next steps

General feedback

APRA seeks feedback on the draft revisions to:

• Prudential standards: GPS 115, GPS 116, Prudential Standard GPS 230 Reinsurance Management (GPS 230) and CPS 320;
• Prudential practice guides: GPG 116 and Prudential Practice Guide GPG 245 Reinsurance Management Strategy (GPG 245); and
• Reporting standards: GRS 115.0, GRS 115.0.G, GRS 115.1, GRS 115.1.G, GRS 116.0 and GRS 116.0.G.

Specific questions

Input is also invited on the following questions:

1. APRA proposes that these changes, including the accompanying reporting changes, come into effect on 1 January 2027, allowing approximately 6 months for implementation. Is this timeline appropriate?
2. Do the proposals strike the right balance between improving access to alternative forms of reinsurance and maintaining financial safety?
3. How will these revisions impact the speed at which the capital treatment of reinsurance arrangements under GPS 115 and GPS 116 is determined?
4. Are there any other barriers to accessing alternative reinsurance arrangements in APRA’s prudential framework? If so, how can they be reduced?
5. Are there material costs associated with these proposals (one-off or ongoing compliance costs)? If so, what are they?

Confidentiality proposal

As stated in paragraph 1.3.4 above, APRA is proposing that the new data items in GRS 115.0, GRS 115.0.G, GRS 115.1 and GRS 115.1.G are classified as non-confidential. Importantly, despite the proposed non-confidentiality, the new data items will not be included in any of APRA's statistical publications without prior public consultation. It is proposed the new data items in GRS 116.0 and GRS 116.0.G are classified as confidential.  

APRA invites feedback on these confidentiality proposals.

2.1 Request for submissions

APRA invites written submissions on the draft updated versions of the prudential standards, prudential practice guides and reporting standards. Written submissions should be sent to policydevelopment@apra.gov.au by 30 January 2026 and addressed to General Manager, Policy Development, APRA.

2.2 Important disclosure information – publication of submissions

All information in submissions will be made available to the public on the APRA website unless a respondent expressly requests that all or part of the submission is to remain in confidence. Automatically generated confidentiality statements in emails do not suffice for this purpose. Respondents who would like part of their submission to remain in confidence should provide this information marked as confidential in a separate attachment.

Submissions may be the subject of a request for access made under the Freedom of Information Act 1982 (FOIA). APRA will determine such requests, if any, in accordance with the provisions of the FOIA. Information in the submission about any APRA-regulated entity that is “protected information” under section 56 of the Australian Prudential Regulation Authority Act 1998 (APRA Act) can only be disclosed or produced for an authorised purpose under s 56 of the APRA Act and is likely to be exempt from production under the FOIA.

Attachment 1: Response to submissions

This attachment summarises the feedback from the November 2024 consultation letter.

Targeted adjustments to reinsurance capital settings

All perils requirement

A potential targeted adjustment would have allowed insurers to calculate the 1-in-200 year loss for the largest single peril and buy all perils reinsurance to that level.

Comments received

There was a broad spectrum of views expressed in the submissions. Some stakeholders were supportive, citing potential cost savings, alignment with international practices and increased flexibility in reinsurance structuring.

Others raised concerns about reduced capital adequacy, difficulty isolating perils, mismatched risk metrics, and limited cost saving benefits due to minimum pricing constraints in upper reinsurance layers. Some respondents cautioned that the change could undermine the robustness of the current framework, particularly for diversified portfolios or in regions with multiple significant perils.

There was also concern that the option may not assist the effective use of catastrophe bonds and Insurance Linked Securities, which typically cover named perils rather than all perils.

APRA’s response

After considering feedback concerning potential unintended consequences, APRA will no longer pursue this approach to addressing the challenges associated with determining the capital treatment of single peril insurance.

Instead, APRA now proposes to improve access to single peril reinsurance arrangements by repurposing the existing net whole-of-portfolio approach within the existing capital framework to be used for single peril reinsurance (outlined in section 1.3.1).

Reinstatement requirement

Consideration was given to relaxing the requirement to have a reinstatement from the current level of 1-in-200 years to a lower level.

Comments received

Feedback highlighted potential benefits such as improved alignment with international practices, reduced pro-cyclicality in capital requirements, and enhanced access to alternative capital sources like catastrophe bonds. Several stakeholders noted that the current reinstatement requirement can limit flexibility in reinsurance structuring and does not necessarily reflect standard global market practices.

Concerns were raised about the potential weakening of industry resilience, particularly in the event of correlated or clustered catastrophes, and the risk of market dislocation if insurers are forced to seek reinstatement cover post-event.

APRA’s response

After considering industry feedback that this proposal could help modernise the capital framework but might also have unintended consequences, APRA has revised its approach.

The updated proposal is to remove the reinstatement requirement for reinsurance arrangements where reinstatements are typically unavailable, such as catastrophe bonds. This aims to deliver the same intended outcome of facilitating access to alternative forms of reinsurance but with fewer unintended consequences.

Reinstatement premium requirement

Consideration was given to removing the requirement for a reinstatement premium to be held in the Natural Perils Vertical Requirement (NP VR) and Other Accumulations Vertical Requirement (OA VR) of the ICRC.

Comments received

Industry feedback was mixed. Several stakeholders supported the change, noting it would align APRA’s standards with international reinsurance practices, reduce capital complexity, and offer insurers greater flexibility in structuring reinsurance programs, potentially lowering upfront premiums. Some also highlighted that it could improve access to traditional reinsurance markets and reduce procyclical capital burdens, particularly for insurers with New Zealand exposures.

Others expressed concern that the change could increase profit volatility, reduce guaranteed post-event protection, and lead to higher reinsurance costs over time, especially if reinsurers were to shift to paid reinstatements. Some stakeholders also cautioned that removing the requirement could weaken market discipline and increase systemic risk if insurers under-provision for reinstatement costs.

APRA’s response

Recognising that some respondents recommended maintaining the requirements for reinstatement premium to preserve current market stability and ensure adequate post-event protection, APRA will not proceed with this proposal. The reinstatement premium requirement will remain unchanged. 

This proposal was originally suggested to accompany amending the requirement to have a reinstatement, from the current level of 1-in-200 years to a lower level. Both these changes have now been replaced by the proposal to remove the reinstatement requirement for reinsurance arrangements where reinstatements are typically unavailable. 

Technical refinements to the GI reinsurance framework  

Submissions were largely supportive of the technical refinements, citing the operational benefits that could be gained from addressing these issues. 

Expanded AA role and change to aggregate reinsurance definition

One proposal was to update the prudential framework with principles for considering reinsurance so that for certain arrangements, the AA can determine the appropriate capital outcome. The other proposal was to amend the definition of aggregate reinsurance to reduce the volume of referrals to APRA.

Comments received

Industry was broadly supportive of the proposal to expand the role of the AA to assess the capital implications of some reinsurance arrangements. Common feedback was that clearly articulated principles and appropriate guidance are needed. Some feedback also suggested expanding the role of the AA even further.

Industry was also supportive of reducing the number of referrals to APRA for capital approval related to aggregate reinsurance, given the concept of aggregate reinsurance is widely understood.

APRA’s response

APRA will proceed with the proposal to expand the role of the AA to assess the capital implications of some reinsurance arrangements. Consequently, it is no longer necessary to revise the definition of aggregate reinsurance. 

As summarised in the previous chapter, APRA proposes that the role of the AA should be widened. Through this proposal, APRA aims to promote efficiency by removing the need for APRA approval of capital treatment under GPS 115 and GPS 116 of reinsurance arrangements in certain circumstances. This proposal would also simplify access to alternative forms of reinsurance by allowing the AA to determine the correct capital treatment for such arrangements.

Other technical refinements

Respondents were generally supportive of the other technical refinements proposed. There were some clarifications and minor issues raised. These have informed the draft revisions to standards and guidance to give effect to these proposals. 

Additional consultation suggestions

Additional feedback was submitted regarding potential refinements to the GI reinsurance framework. Common areas included the natural perils horizontal requirement, treatment of non-APRA reinsurance, cession limits, internal reinsurance, and proportionality of reporting. APRA has reviewed these suggestions with respect to the review’s objectives and timelines. At this stage, no further changes are being proposed.

Attachment 2: Summary of proposed revisions

1. Improving access through targeted adjustments

1.1 Reinstatement requirements

Draft revisions are proposed to GPS 116 para. 18 and 19, Attachment B para. 10 and 11 to only require reinstatement when they are generally available.

1.2 Use of net whole-of-portfolio approach

Draft revisions are proposed to GPS 116 para. 21 to direct insurers to use the net whole-of-portfolio method in certain circumstances.

2. Enhancing efficiency by minimising APRA approval requirements

2.1 Process for determining capital treatment of reinsurance arrangements

A number of changes are proposed to GPS 115, GPS 116, CPS 320 and GPG 116 to articulate when:

• APRA approval is required for the capital treatment of a reinsurance arrangement; and
• Advice from the AA is required to determine the capital treatment of a reinsurance arrangement.

3. Fine tuning the framework

3.1 Catastrophe modelling details

Draft revisions are proposed to GPS 230 para. 31 to require that catastrophe modelling details are included in the Reinsurance Arrangement Statement (ReAS). The details to be included are the models used, modelling assumptions and a copy of the return period table. In response to stakeholder feedback received via consultation, draft revisions are also proposed to para. 31 to ensure OA VR modelling details are also included in the ReAS.

3.2 Non-modelled risks

To ensure non-modelled risks are taken account of in catastrophe modelling, it is proposed that GPS 116 para. 24, 36 and 47 are revised to include “an allowance for non-modelled risks.”

3.3 Arbitration and claim payment to be in Australia

It is proposed that para. 34 of GPS 230 is revised to require that the seat of arbitration for any disputes is to be in Australia and that payments by way of reinsurance are to be made in Australia.

3.4 Contracts to be legally binding

To modernise the requirement, it is proposed that para. 42 of GPS 230 is updated to replace the requirement to have arrangements signed and stamped with a requirement for them to be legally binding between all contracting parties.

Minor drafting changes have also been made to GPS 116 para. 16 in response to stakeholder feedback to clarify APRA’s expectations in relation to the inception date and two-month rules.

3.5 Updating and streamlining guidance

Updates are proposed to GPG 115 to support changes being made to reduce the need for APRA approval of the capital treatment of certain reinsurance arrangements.

To streamline guidance, it is proposed that Prudential Practice Guide GPG 220 Credit Risk (GPG 220) is retired and GPG 245 is updated to include aspects from GPG 220 relating to reinsurance.

4. Reporting modifications

4.1 Process for determining capital treatment of reinsurance arrangements

Additional and updated reporting items to capture adjustments as advised by the AA and adjustments as approved by APRA under GRS 115.0, GRS 115.1, GRS 116.0, GRS 115.0.G, GRS 115.1.G, GRS 116.0.G.

Footnotes

^1.APRA, Consultation on targeted adjustments to general insurance reinsurance settings (Consultation letter, 7 November 2024).

^2. More information on this consultation is available at: Consultation on GI & LI non-confidentiality determination and statistical publications.