The Australian Prudential Regulation Authority (APRA) is drawing to the attention of APRA-regulated entities a recent report by the International Association of Insurance Supervisors (IAIS), which takes stock of work on diversity, equity and inclusion (DEI) being undertaken globally by insurance supervisors, relevant international organisations and the insurance industry.
The IAIS, of which APRA is a member, considers that a focus on improving and sustaining DEI will help insurers build cultures that better support sound prudential and consumer outcomes. The report aims to better understand where future challenges lie and what developments may be required to overcome them.
All regulated entities – including banks and superannuation trustees – may find the IAIS report useful in considering how they approach diversity and inclusion.
Arising from the outcome of this stocktake, the IAIS is initiating further work to examine the link between DEI and governance, risk management and corporate culture, and also how DEI considerations in insurers’ business conduct may result in fairer treatment of consumers who are vulnerable, under-served or have different needs in comparison with a normative or majority consumer profile.
APRA recognises that strong diversity and inclusion practices are important elements to ensure the financial system is better able to support the economy through well-run entities and sound financial markets that can respond to the diverse needs of the community. A resilient financial services sector is one that can bring together and respond to different views and perspectives, so that opinions and ideas can be raised and decisions challenged effectively, thereby enhancing governance and risk management.
APRA has also previously spoken about the importance of boards comprising people from a range of professional and demographic backgrounds to facilitate better decision-making and stronger risk-management. APRA will consider how it might strengthen consideration of inclusion and diversity across its regulated industries as part of this year’s review of Prudential Standard CPS 510 Governance.
The IAIS Stocktake on diversity, equity and inclusion in the insurance sector is available here: Diversity, Equity and Inclusion - International Association of Insurance Supervisors.