General Information & Client Service
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
May 31, 2018

Peter Kohlhagen, APRA’s Senior Manager of Policy Development, spoke about combating complacency in a new era of Private Health Insurance (PHI) instability, at the Health Insurance Summit in Sydney. He built on the importance of resilience in the face of sustainability challenges and updated the audience on APRA’s work with insurers on the Prudential Policy Roadmap, including exploring APRA’s initial thinking on reviewing the capital standards.

He said: “APRA is working with industry to implement a prudential framework that supports insurers to build resilience, so that they are sustainable in the long term. However, no amount of policy, process or regulation can succeed without insurers thinking deeply about what could go wrong—and taking action early.” As per Mr. Kohlhagen, a robust stress testing program, which complements regulatory capital requirements, is one antidote to complacency. “We see evidence that current stress testing practices fall well short of those in other APRA-regulated industries” and “we expect to see a material strengthening of stress testing practices over time.” He then discussed the state-of-play on the Policy Roadmap, highlighting that APRA expects to release final standards on the role of the Appointed Actuary "very soon" and it is consulting on the first installment of its broader work on operational risk, with a new standard that addresses the increasingly prominent issue of cyber risk. APRA also launched a consultation on the second phase, governance, in February this year, wherein it proposed to strengthen the rules around governance, fitness and propriety, and audit, with effect from July 01, 2019. “With phases 1 and 2 of the Roadmap substantially complete, critical parts of the regulatory architecture have been modernized and made fit for purpose,” he said.

He then examined phase 3, which is capital. As per the Roadmap, APRA did not intend to review the capital standards until 2018-2019. Now the time for review is coming closer. “As our thinking progresses on the review of capital standards, we will release a ‘roadmap for capital.’” He finally discussed the challenges related to sustainability of the industry and examined how APRA uses the sustainability metrics, which include measures on financial performance, capital and liquidity, cross-subsidization and risk equalization, social license (reflects the trust of the community in an industry), membership demographics, and APRA’s own risk ratings of the insurer. With respect to sustainability challenges, “APRA will look to understand how the strategy and financial performance sits within the insurers’ pricing philosophy, capital management, risk management, and business planning. We will also look to understand any corrective action the insurer intends to take regarding the situation.” He concluded that APRA continues to “encourage insurers to step up to the challenge of resisting complacency.”

 

Related Link: Speech

Keywords: Asia Pacific, Australia, Insurance, Private Health Insurance, Policy Roadmap, Stress Testing, Governance, APRA

Related Insights
News

APRA Authorizes New Restricted Authorized Deposit Taking Institution

APRA announced that it has authorized Xinja Bank Limited as a restricted authorized deposit-taking institution (Restricted ADI) under the Banking Act 1959.

December 18, 2018 WebPage Regulatory News
News

US Agencies Propose Derivative Counterparty Credit Exposure Framework

US Agencies (OCC, FED, and FDIC) proposed to implement a new approach for calculating the exposure amount of derivative contracts under the regulatory capital rule.

December 17, 2018 WebPage Regulatory News
News

HKMA Announces Intention to Consult on Updated BCBS Disclosure Rules

HKMA announced that it will consult the industry in due course on the relevant implementation proposal to give effect to the disclosure requirements of the December 2018 package by BCBS.

December 17, 2018 WebPage Regulatory News
News

EBA Finalizes Guidelines on Disclosure of Non-Performing Exposures

EBA published the final guidelines on disclosure of non-performing and forborne exposures.

December 17, 2018 WebPage Regulatory News
News

HKMA Issues and Revises Reporting Forms Under the IRRBB Framework

HKMA issued a revised version of the Supervisory Policy Manual (SPM) IR-1, with an updated title “Interest Rate Risk in the Banking Book” (IRRBB).

December 14, 2018 WebPage Regulatory News
News

EBA Single Rulebook Q&A: Second Update for December 2018

EBA published answers to six questions under the Single Rulebook question and answer (Q&A) updates for this week.

December 14, 2018 WebPage Regulatory News
News

OSFI Proposes Changes to Guideline on Large Exposure Limits

OSFI proposed revisions to the Guideline B-2 on Large Exposure Limits, for implementation in the first quarter of 2020.

December 13, 2018 WebPage Regulatory News
News

BCBS Consults on Disclosure Rules for Leverage Ratio Window-Dressing

BCBS published a consultative document on revisions to the leverage ratio disclosure requirements to address the leverage ratio window-dressing behavior.

December 13, 2018 WebPage Regulatory News
News

PRA Updates the Policy on Approach to Systemic Risk Buffer

PRA published the final Statement of Policy on the PRA approach to the implementation of the systemic risk buffer (SRB), as proposed in the consultation paper CP29/18.

December 13, 2018 WebPage Regulatory News
News

EP Report Examines Financial Supervision and Regulation in US

European Parliament published a report that provides a concise overview of the Dodd-Frank Act, the challenges of its implementation, and efforts to roll back the Act, in large part due to what are viewed to be vague and impractical provisions.

December 12, 2018 WebPage Regulatory News
RESULTS 1 - 10 OF 2343