The board of HIH would have benefitted from a new type of report that sets out to ensure insurance companies are compliant with financial measures, according to leading actuary Estelle Pearson.

Speaking at an Insurance Council of Australia seminar last week, Ms Pearson, a partner at Finity Consulting (formerly Trowbridge Deloitte), said financial condition reports (FCRs) being implemented by the Institute of Actuaries of Australia (IAA) early next year will enable insurance company boards to be better informed on the overall financial condition of the company.

The FCR concept, which has already been accepted by the Federal Government, was driven by an HIH Royal Commission recommendation.

“Recommendation 41 said that APRA should modify the prudential standards to require the annual production by a general insurer’s actuary of a report on the overall financial condition of the insurer,” Ms Pearson said. “APRA asked the IAA to develop the standards.”

“Certainly the board of HIH would have benefitted.”

An FCR is a report on the risks to the insurer’s profit and solvency. It is prepared for the board and provided to APRA, but is not a public document.

Ms Pearson says while the FCR presents a challenge to the general insurance industry, “in 10 years, insurers will say what a great idea FCRs were”.