Increasing the availability of life retirement products has been declared a strategic priority for the Australian Prudential Regulation Authority.

The regulator will continue to assess the challenges insurers face offering longevity products and identify lessons from international markets that can be applied to Australia, according to its 2024-25 corporate plan. It will also evaluate information gathered through engagements with the industry, including a survey in the first half of this year, and formulate next steps.

It says by the time the next corporate plan is published, a parliamentary inquiry report on Australia’s retirement system will be out and this, among other issues, “will feature prominently in discussions about the role of financial regulators over the coming years to address significant new and emerging risks”.

APRA will also continue its system-wide assessment of life insurers’ progress in meeting product sustainability expectations across individual and group insurance business, the plan says.

The regulator has enhanced its focus on retirement outcomes as Treasury consults on ways to strengthen the superannuation system because people are living longer.

APRA has said the need for “innovative” retirement offerings that address longevity risk represents an opportunity for the life insurance industry.

“Australians are transitioning into retirement in ever-growing numbers and with increasingly higher account balances,” it said in a summary of a recent life insurance roundtable. “APRA encourages insurers to continue to work closely with superannuation trustees to help members better understand longevity risk and the role of longevity solutions in mitigating that risk.”

APRA’s roundtable in July was attended by 21 life insurance CEOs and other executives, plus representatives from Treasury, the Australian Securities and Investments Commission and the Council of Australian Life Insurers.

Participants generally agreed there is a “genuine” need for longevity products, according to a summary of the discussions.

But “limited demand” is a key obstacle, along with distribution, product design, prudential regulation and lack of data.

“The consensus was that the demand challenge needs to be addressed to unlock the longevity market,” the summary said. “Participants also noted that, if the demand challenge is addressed, there would be sufficient capital and support from life insurers’ parents to back the offering of those longevity solutions.”

Earlier this year Treasury wrapped up its consultation on how the super system can support people as they live longer.

“Now the need to focus on retirement outcomes is becoming more urgent,” the consultation paper said. “An ageing population will see more Australians retiring and looking to their superannuation to play a greater role in providing income.”

The paper says development costs, incentives, and competition and legacy products may be factors behind the small market for lifetime income products.