The Institute supports APRA’s ongoing role in the collection and reporting of industry data, the evolutionary approach it proposes to take and, more generally, the continuing development of insurance industry statistics. However, we encourage APRA to release additional information in general and life insurance beyond what is proposed to ensure its statistical publications support all stakeholders being well informed and provide further commentary regarding the proposals for private health insurance statistical publications.

The Institute fully supports the ambitions of the APRA proposals and key elements, although has concerns that some elements may lead to reserves that are higher and more conservatively invested than is necessary, to the detriment of overall member outcomes.

The Institute welcomes the opportunity to comment on APRA's draft prudential guides, CPG 190 Financial Contingency Planning (CPG 190) and CPG 900 Resolution Planning (CPG 900). APRA has prepared these guides based on the two proposed draft prudential standards APRA released for consultation in December 2021.

This submission relates specifically to the consequential amendment to the Draft LPS 117 and the determination of the value of assets of the statutory fund or general fund (VAF) for asset concentration limits that apply to non-reinsurance assets (paragraph 16). The Institute notes that APRA has previously stated that it is satisfied with capital levels across the industry. This change, however, has the potential to materially increase capital requirements for companies with a significant reinsurance asset.

The Institute welcomes APRA’s focus on entities managing severe scenarios that threaten their financial viability (CPS 190) and, in the case of large and complex entities, pre-positioning to minimise the impact of entity failure via resolution planning (CPS 900). These are useful additions to an entity’s overall risk and capital management frameworks. The Institute has identified several areas of potential changes to enhance consistency between APRA’s stated policy intentions and the proposed prudential standards, including: more holistic coverage of superannuation funds, greater clarity of the intersection with the ICAAP, the inclusion of non-financial risks, and timing considerations.

The Institute welcomes and supports the publication of this prudential guidance in order to establish APRA’s expectations and evolve the maturity of regulated institutions in this important area of strategic risk. The Institute encourages APRA to use this opportunity of issuing its first guidance on climate-related risks to provide more specific direction and firmer expectations that would raise the level of maturity of climate-related financial risk management across regulated institutions and the wider industry.

29 March 2018: Submission to APRA on Prudential Standard SPS 225

This submission sets out the Actuaries Institute's response to APRA's discussion paper on the role of the Appointed Actuary and actuarial advice within insurers released for consultation in June 2016.