Group life insurers’ responses to increased compliance rules have been varied, according to the Australian Prudential Regulation Authority (APRA).

In a letter to insurers, the regulator says most group insurers think their current governance and reporting structures provide sufficient information to their boards.

It says some insurers have reported greater levels of engagement, driven by their boards and management.

“Very few insurers implemented additional engagement and reporting at the behest of management alone,” the letter says. “Some insurers were silent on whether the board or management initiated any intensification of board and management engagement.”

APRA has called on insurers to examine their reporting structures, to ensure group life business has “adequate oversight”.

It says most insurers have not changed their risk management frameworks and appetites, despite issues with profitability in group life business.

“These insurers indicated the issues facing the group insurance market had already been captured by their risk management frameworks and risk assessment processes, and were carefully considered by the board,” the letter says.

APRA says a number of insurers have changed certain risk appetite metrics and business acceptance criteria.

“Some of these changes included extending timeframes for tender responses, including additional risk-mitigating conditions in proposals, only quoting to clients who already had group policies in place or no longer tendering for group insurance schemes.”

The regulator says group life insurers still have trouble obtaining member data from super funds, despite a number of prudential standards being put in place.

“APRA’s observation from responses received from insurers is that the impact of poor data tends to increase over time. Insurers have responded to the issue and now appear increasingly to be including data quality requirements as conditions in tenders. These include the ongoing right to audit data post-appointment and retaining the right to adjust the pricing should the audit identify significant discrepancies in the data used for the tender.”