Peter Kohlhagen on Capital Framework for Private Health Insurers
While speaking at the Health Insurance Summit 2019 in Sydney, Peter Kohlhagen from APRA provided an update on the review of capital requirements, also highlighting the plans to release an initial discussion paper, in the coming months, on the capital framework for private health insurance industry. APRA expects that a revised capital framework would be implemented before the end of 2021.
Mr. Kohlhagen highlighted that APRA had, in November 2018, outlined its planned approach to reviewing the capital framework for private health insurers. The current capital framework has been in place since 2014 and this review provides an opportunity to ensure that capital standards in the industry provide for an appropriate level of resilience to protect policyholders. APRA intends to consult on proposals that adapt the capital framework that is already in place for the life and general insurance sectors for the private health insurance industry. However, this does not mean that APRA will apply the framework as it is. Instead, APRA is identifying areas where sector-specific adjustments are warranted to recognize the differing risk profile and business models in the private health insurance industry.
APRA is considering adjustments that reflect the characteristics of insurance risk in the industry to take account of factors like the short-tail nature of claims, risk equalization, health-related business, and the constraints on premium setting and product design in a Gold/Silver/Bronze/Basic world. APRA is considering how to think about potential insurance concentration risks and how the capital framework should recognize the legislative requirements for community rating that underpin the industry. In addition, APRA is considering how to address policy change risk in the capital framework, given that such changes have been a source of insurer stress in the past. The Actuaries Institute is assisting APRA in this by providing some early advice on these matters. The Institute has also established a technical working group to identify issues and suggest approaches that APRA could take to address them in the capital framework.
Finally, he mentioned the APRA intent to release an initial discussion paper in the coming months, outlining the proposed new capital framework for private health insurers. The release of this paper is expected to kick off an extended formal consultation period. APRA is looking forward to continuing to work with the industry to develop a capital framework that supports insurer resilience for the protection of policyholders, reiterated Mr. Kohlhagen.
Related Link: Speech
Keywords: Asia Pacific, Insurance, Private Health Insurers, Capital Framework, Capital Requirements, APRA
Previous Article
FED Updates Technical Instructions for Reporting Form FR Y-14ARelated Articles
OSFI Issues Phase2 Consultation on Climate Scenario Exercise for Banks
The Office of the Superintendent of Financial Institutions (OSFI) recently announced a consultation on the second phase of the Standardized Climate Scenario Exercise (SCSE) for banks and other financial institutions it regulates in Canada.
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
