The proposed update would impose an aggregate limit on exposure to offshore reinsurers, which are not APRA regulated. The regulator launched the consultation in part due to heightened concerns around the group risk market, which plays an “important role” in Australia’s superannuation system.
“The recent growth in life insurers placing business with offshore reinsurers has been a prudential concern, as APRA does not have regulatory authority over these reinsurers. This has limited our ability to maintain appropriate oversight of the financial safety and resilience of the market,” said APRA deputy chair Helen Rowell.
“The proposed revisions to the prudential standards for life insurers are necessary to address the potential risks to policyholders from growing use of offshore reinsurance. But APRA has also sought to balance this by still enabling the benefits of competition and innovation from the participation of offshore reinsurers in the Australian life insurance market.”
The consultation will also propose changes that provide “greater clarity” on regulatory requirements, facilitate the use of risk mitigation techniques, and minimise the regulatory burden associated with bespoke amendments for individual entities.
APRA is seeking stakeholder feedback by 25 June 2021, with the final standard expected to be released by the end of 2021.
Only because inept measures from Treasury is driving insurers offshore. What did think would happen? Maybe we need LESS regulation & get this Govt out of our lives.