Insurance - PricewaterhouseCoopers

1.2
Key developments
Refinements to the existing
prudential framework
Background
In recent years the Australian Prudential Regulation Authority (APRA)’s main policy
focus in General Insurance (“GI”) has been on refinements to the prudential framework
necessary to give effect to the Government’s decision, announced in May 2007,
to extend prudential regulation to all insurers offering insurance to Australian
policyholders. These reforms were aimed at enhancing the integrity of the GI industry
and the protection provided to policyholders. These reforms affected not only Direct
Offshore Foreign Insurers but also existing APRA-regulated general insurers.
The objective of these refinements is to provide a clearer picture of prudential
requirements for foreign insurers and reinsurers, whether branch or subsidiary and to
more closely align the capital factors and treatment of reinsurance recoverables with
policy objectives.
Summary of refinements
There are a number of changes to the existing prudential framework that became
effective during 2008 and 2009 and they are summarised in the following table:
Table 1.1 – Refinements to the existing prudential framework
24 | Insurance facts and figures 2009
Refinement Regulatory
Instrument
Changes to structure of standards
1. The following categories of Insurers have been
implemented by APRA to recognise different
Insurers based on their risk profile:
Category A: Locally incorporated insurer
Category B: Wholly owned subsidiary of
a local or foreign insurer
Category C: Foreign insu rer operating as
a foreign branch
Category D: Association captive insurer
Category E: Sole parent captive insurer.
Effective
from
Comments
GPS 001 1-Jul-08 Section 1.4