The Australian Prudential Regulation Authority (APRA) is consulting on its proposal to amend Prudential Standard LPS 230, which applies to all life insurance companies including friendly societies.

Under the current standard, APRA approval is required for reinsurance contracts that are potentially financial reinsurance arrangements or that include non-standard features or clauses that may affect the extent of risk transfer.

“Given the potential adverse prudential consequences of such arrangements… the current [standard] requires a wide range of contracts to receive APRA approval, and is very narrow in defining which contracts are exempt,” the regulator says.

“The new approach is also intended to reduce the burden on both APRA and life insurers by minimising instances in which contracts that are not of prudential concern are required to be submitted to APRA for approval.”

The closing date for submissions is December 22. For more information, click here.