The Australian Prudential Regulation Authority (APRA) will release a discussion paper next month on its insurance capital review that will reveal more substantial changes for life insurers than general insurers.

Speaking at the Insurance Council of Australia’s Regulatory Update conference in Sydney last week, APRA Executive Member John Trowbridge said new capital prudential standards are set to be implemented in 2012.

He says the objectives are to improve the risk-sensitivity and appropriateness of the standards; improve the alignment of the standards between industries; and consider the standards in light of international developments.

“APRA does not intend to rebuild its prudential standards from first principles but rather intends to adjust the current standards in the light of experience to date with the existing standards.”

“The proposals will include modest changes to the capital adequacy framework for general insurers,” he said, adding: “There will be more substantial changes for life insurers.”

He says APRA will initiate a quantitative impact study “toward the middle of this year” that all insurers will be encouraged to undertake.