APRA Revises the Prudential Standard LPS 230 on Reinsurance Management
APRA published the final revised Prudential Standard LPS 230 on Reinsurance Management and the standard will come into effect from April 01, 2018. LPS 230 applies to all life companies, including friendly societies, registered under the Act.
The current LPS 230 requires reinsurance contracts that are potentially financial reinsurance arrangements, or that include non-standard features or clauses that may impact on the extent of risk transfer, to be submitted to APRA for approval. APRA, on November 03, 2017, had proposed amendments to LPS 230 to refine the regulatory approach for such arrangements. The proposal was to replace the current approach with a more principles-based approach to assessing whether arrangements between a life company and a reinsurer require APRA approval. APRA had not intended to significantly widen the range of arrangements that must be submitted for approval. Rather, APRA would only expect to be consulted on arrangements that may give rise to potentially adverse prudential or policy owner outcomes.
APRA has received three submissions in response to the consultation, two of which were non-confidential. APRA amended its proposals in response to the submissions and these amendments have been incorporated in the final version of LPS 230, with key changes to the draft version of LPS 230 being listed in Attachment A to the APRA notification letter. APRA noted the feedback that it would be appropriate to support the principles-based approach in LPS 230, with some additional guidance on interpretation. Thus, APRA will release responses to the frequently asked questions (FAQs) in submissions, including the topics listed in Attachment B, which covers referable reinsurance arrangements.
Related Link: Consultation on LPS 230
Effective Date: April 01, 2018
Keywords: Asia Pacific, Australia, Insurance, Reinsurance, LPS 230, Reinsurance Management, APRA
Related Articles
BoE Provides Reporting Update on Form AS and Form FV
BoE updated the known issues document for the statistical reporting Forms AS and FV.
EBA Provides Clarity on Implementation of Guidance on COVID Reporting
EBA updated the report on the implementation of selected COVID-19 policies.
OSFI Provides Update on Implementation of IFRS 17 in Canada
OSFI published a letter that provides an update on the milestones for the implementation of the IFRS 17 standard on insurance contracts.
FSI Note Discusses Challenges Associated with COVID Relief Measures
The Financial Stability Institute (FSI) of BIS published a brief note that examines the supervisory challenges associated with certain temporary regulatory relief measures introduced by BCBS and prudential authorities in response to the COVID-19 pandemic.
BCBS Consults on Principles for Operational Risk and Resilience
BCBS is consulting on the principles for operational resilience and the revisions to the principles for sound management of operational risk for banks.
BoE Updates Template and Definitions for Form ER
BoE updated the reporting template for Form ER as well as the Form ER definitions, which contain guidance on the methodology to be used in calculating annualized interest rates.
MAS Announces Key Initiatives to Support Adoption of SORA
MAS announced several initiatives to support adoption of the Singapore Overnight Rate Average (SORA), which is administered by MAS.
HKMA Announces Repayment Deferment Under Payment Holiday Scheme
HKMA, together with the Banking Sector Small and Medium-Size Enterprise (SME) Lending Coordination Mechanism, announced a ninety-day repayment deferment for trade facilities under the Pre-approved Principal Payment Holiday Scheme.
ESRB Paper Presents Alternative Approach to EBA Stress Test Proposal
The Advisory Scientific Committee of ESRB published a response, in the form of an Insights Paper, to the EBA proposals for reforms to the stress testing framework in EU.
FASB Simplifies Accounting for Certain Financial Instruments
FASB issued a new Accounting Standards Update (2020-06) to improve financial reporting associated with accounting for convertible instruments and contracts in an entity’s own equity.
