APRA Issues Corrections to Prudential Standards for General Insurers
APRA issued minor corrections to two prudential standards for general insurers: GPS 110 on capital adequacy requirements and GPS 116 on insurance concentration risk charge as part of the capital adequacy. The minor corrections reinstate words that were inadvertently deleted from the standards when they were remade in April 2019. The updated standards have been now published in the Federal Register of Legislation, with the effective date for the revised versions being July 01, 2019.
APRA, on April 17, 2019, had determined nine general insurance prudential standards, reflecting the consequential amendments arising from the introduction of the new Prudential Standard CPS 320 Actuarial and Related Matters (CPS 320) and Prudential Standard GPS 340 Insurance Liability Valuation (GPS 340). During the process of revoking the former versions of those nine general insurance prudential standards and determining the new versions of those standards, several words were inadvertently omitted from GPS 110 and GPS 116. The omitted words have been reinstated through this revision.
GPS 110 requires a general insurer or Level 2 insurance group to maintain adequate capital against the risks associated with its activities. GPS 116, however, requires a general insurer or Level 2 insurance group to maintain adequate capital against the risks associated with insurance concentration in its activities. The key requirements of GPS 110 are that a general insurer or Level 2 insurance group must:
- Have an Internal Capital Adequacy Assessment Process and must maintain required levels of capital
- Determine its prescribed capital amount having regard to a range of risk factors that may adversely impact a general insurer or Level 2 insurance group’s ability to meet its obligations. These factors include insurance risk, insurance concentration risk, asset risk, asset concentration risk and operational risk
- Comply with any supervisory adjustment to capital imposed by APRA
- Make certain public disclosures about the capital adequacy position of the general insurer or Level 2 insurance group
- Seek consent from APRA for certain planned capital reductions of the general insurer or Level 2 insurance group
- Inform APRA of any significant adverse changes in the general insurer or Level 2 insurance group’s capital position
Related Links
Effective Date: July 01, 2019
Keywords: Asia Pacific, Australia, Insurance, General Insurers, Prudential Standards, GPS 110, GPS 116, Capital Adequacy, Concentration Risk, APRA
Previous Article
FCA and PRA Amend Reporting Requirements for Mortgage LendersNext Article
FED Updates FR Y-9C Form for September ReportingRelated Articles
PRA Finalizes Supervisory Approach for Non-Systemic Banks in UK
PRA published the policy statement PS8/21, which contains the final supervisory statement SS3/21 on the PRA approach to supervision of the new and growing non-systemic banks in UK.
EBA Finalizes Standards on Methods of Prudential Consolidation
EBA published a report that sets out the final draft regulatory technical standards specifying the conditions according to which consolidation shall be carried out in line with Article 18 of the Capital Requirements Regulation (CRR).
EBA Updates List of Other Systemically Important Institutions in EU
EBA updated the list of other systemically important institutions (O-SIIs) in EU.
BCBS Report Concludes Basel Risk Categories Can Capture Climate Risks
BCBS published two reports that discuss transmission channels of climate-related risks to the banking system and the measurement methodologies of climate-related financial risks.
UK Authorities Welcome FSB Review of their Remuneration Regime
UK Authorities (FCA and PRA) welcomed the findings of FSB peer review on the implementation of financial sector remuneration reforms in the UK.
PRA and FCA Letter on Addressing Risks from Use of Deposit Aggregators
PRA and FCA jointly issued a letter that highlights risks associated with the increasing volumes of deposits that are placed with banks and building societies via deposit aggregators and how to mitigate these risks.
MFSA to Amend Banking Act and Rules in Coming Months to Transpose CRD5
MFSA announced that amendments to the Banking Act, Subsidiary Legislation, and Banking Rules will be issued in the coming months, to transpose the Capital Requirements Directive (CRD5) into the national regulatory framework.
EC Delegated Regulation on Specialized Lending Exposures Under CRR
EC finalized the Delegated Regulation 2021/598 that supplements the Capital Requirements Regulation (CRR or 575/2013) and lays out the regulatory technical standards for assigning risk-weights to specialized lending exposures.
OSFI Proposes to Enhance Assurance Expectations for Basel Returns
OSFI launched a consultation to explore ways to enhance the OSFI assurance over capital, leverage, and liquidity returns for banks and insurers, given the increasing complexity arising from the evolving regulatory reporting framework due to IFRS 17 (Insurance Contracts) standard and Basel III reforms.
ECB Issues Results of Benchmarking Analysis of Recovery Plans of Banks
ECB published results of the benchmarking analysis of the recovery plan cycle for 2019.
