The Insurance Council of Australia (ICA) and the Actuaries Institute have taken opposing positions on insurer peer reviews.

The Australian Prudential Regulation Authority (APRA) wants feedback on whether it should continue being mandatory for insurers to obtain external peer reviews of their appointed actuaries’ insurance liability valuation reports.

The regulator proposes amending prudential standard GPS320, which requires a peer review, with a paragraph that allows it to instead request a review.

ICA told APRA the regulatory requirement is costly and unnecessary, and a more flexible approach would reduce costs to the industry by $3.54 million a year.

It says the compliance cost of mandatory reviews is greater than any benefits identified.

But the Actuaries Institute says there are “clear circumstances where the external peer review adds value and is desirable”.

It envisages difficulties for APRA in applying discretion to obtain a review, and says the cost savings from removing mandatory reviews probably would not be large.

The institute says the regulator could allow insurers to apply annually for exemptions, or have a triennial review.

If the mandatory requirement is removed, APRA should provide guidelines to ensure boards carefully consider whether they need a review.