Insurance - PricewaterhouseCoopers

Fit and proper
GPS 520 Fit and Proper applies to all general insurers and authorised non-operating
holding companies. The key requirements of this standard are that:
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An institution must have and implement a written fit and proper policy that meets
the requirements of the standard;
The fitness and propriety of a responsible person must generally be assessed
prior to their initial appointment and then re-assessed annually (or as close to
annually as practicable);
An institution must take all prudent steps to ensure that a person is not appointed
to, or does not continue to hold, a responsible person position for which they are
not fit and proper; and
Information must be provided to APRA regarding responsible persons and the
institution’s assessment of their fitness and propriety.
The standard stipulates who are regarded as responsible people at different
types of institutions and sets out additional restrictions on the Appointed Actuary
and Appointed Auditor roles. However, it leaves the determination of what is an
appropriate fit and proper policy in the hands of the general insurer.
Changes to GPS 520, effective 1 July 2008
The updated standard specifies the criteria for the Appointed Actuaries of the
Category B and Category C insurers. For Category B (wholly owned subsidiary of
foreign insurer) or Category C (foreign insurer operating as a foreign branch) insurers:
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Group Appointed Actuary should be employed within the foreign insurance group
and can be non Australian resident.
Reviewing Actuary must reside in Australia and be a Fellow or Accredited
member of IAAust.
APRA targeted reviews
Both the Insurance Act and the prudential standards stipulate that the Appointed
Auditor (or Appointed Actuary) may be required to undertake other functions
specified by APRA in consultation with the general insurer.
In 2003, APRA began a process of “targeted reviews” of general insurers. These
reviews highlight a particular area that APRA is interested in and require the insurer to
engage the Appointed Auditor to prepare a report over a selected area of operation.
Apart from highlighting areas for further improvements, these reviews provide APRA
with an industry snapshot that helps to identify and promote best practices.
The last targeted review focussed on Reinsurance documentation was carried out
during 2006/07 and the report was issued in May 2008.
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