APRA released a package of prudential standards and guides to improve governance and decision-making in the private health insurance (PHI) industry. The package contains three new prudential standards, along with two prudential guides designed to assist insurers fulfill the requirements of the standards. The revised prudential standards will come into effect from July 01, 2019.
The measures, which were first outlined in a consultation package that was released in February this year, introduce stronger prudential standards that have successfully lifted capabilities across other APRA-regulated industries. The new prudential standards for private health insurers are:
- Prudential Standard CPS 510 Governance (CPS 510), a stronger cross-industry standard on board governance and renewal, which replaces the equivalent PHI-specific standard, HPS 510 Governance
- Prudential Standard CPS 520 Fit and Proper (CPS 520), which requires boards to establish and apply a written policy to ensure the competence and integrity of anyone exercising material influence over the company
- Prudential Standard HPS 310 Audit and Related Matters (HPS 310), which requires private health insurers to appoint an auditor to provide independent advice on their operations, financial position, and risk controls
APRA has also released two Prudential Practice Guides, CPG 510 and CPG 520, to help private health insurers meet the requirements of the new standards. Additionally, HPS 001 is the prudential standard that defines key terms referred to in other prudential standards that are applicable to private health insurers (also effective from July 09, 2019). APRA also confirmed that it will revoke the Prudential Standard HPS 350 Disclosure to APRA, which is no longer necessary. This is the culmination of Phase Two of the APRA roadmap for reviewing the PHI prudential framework. Phase One, focused on risk, resulted in the adoption of CPS 220 in April, the cross-industry risk management prudential standard of APRA. Phase Three will examine the capital standards in the industry and will commence later this year.
Effective Date: July 01, 2019
Keywords: Asia Pacific, Australia, Insurance, Private Health Insurers, CPS 510, CPS 520, HPS 310, HPS 001, APRA
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