Lloyd’s has hit back at claims by leading industry figures that the exodus of insurance business to overseas markets exposes Australian policyholders to lesser standards of prudential protection. The market’s representative in Australia, Keith Stern, said the new prudential standards being introduced by APRA already apply to Lloyd’s to some extent.

An amendment to the Insurance Act in 1998, specifically designed to update levels of protection for customers using the Lloyd’s market, created a series of trust funds divided over a number of years of account. There’s now about $400 million in the trust fund, which is managed by an independent trustee with the approval of APRA. Mr Stern said this arrangement is unlikely to change under the new General Insurance Act.

“In terms of any other legislation, whether it’s GST or stamp duty or fire service levies, we’re treated like any other insurer,” he said. “We don’t expect any soft treatment from APRA.”

While the Lloyd’s market operates under special provisions, the broad standards related to capital adequacy, investment criteria and actuarial valuations ensures Lloyd’s does answer to the Australian regulator.