The Insurance Council of Australia (ICA) wants to work with the Australian Prudential Regulation Authority (APRA) as it prepares the second stage of its corporate governance reforms. But it’s concerned that the prudential regulator may be creeping into the territory of its sister organisation, the Australian Securities and Investments Commission (ASIC).

Speaking at a seminar in Sydney late last week, ICA President Mike Wilkins said that although the industry supports the principle of good governance, it is concerned the proposed new regulations may overlap with ASIC controls.

The 1997 Wallis inquiry established the “twin peaks” approach to regulation – APRA dealing with financial regulation and ASIC providing consumer and investor protection.

“ICA argues that current APRA standards, regulation of the Corporations Act by ASIC and Australian Stock Exchange (ASX) guidelines, together with proposed APRA standards for fitness and propriety and the regulation of conglomerates, are adequate to ensure that policyholders and other affected stakeholders are properly protected,” Mr Wilkins said.

“There has not been sufficient time to judge whether recent changes in ASIC corporate governance provisions through ASX guidelines and CLERP 9 provisions will be effective in achieving the necessary level of policyholder protection.”

He says a highly prescriptive “one-size-fits-all” approach is inappropriate for the general insurance industry, which encompasses a wide variety of corporate structures.

About 80 submissions on the proposed “fit and proper” regime for company directors were presented by the May 28 deadline, but the regulator has extended the time limit. There have also been indications from APRA Chairman John Laker that the “fit and proper” plan may be watered down to meet the industry’s concerns. The time limit extension has added to speculation that APRA may push back the introduction of the reforms.