The Australian Prudential Regulation Authority (APRA) has revised its proposed prudential standards for level two general insurers after receiving four submissions from the industry.

In a letter to general insurer CEOs, APRA GM Policy Helen Rowell says while the unnamed submissions broadly support the standards, there are some questions over detail.

“Submissions endorsed APRA’s proposed refinements, welcoming the alignment of the reporting frameworks and noting that the refinements struck an appropriate balance between benefits and additional obligations,” Ms Rowell said in the letter.

“The submissions sought clarification on a number of the proposals.”

In light of these submissions, APRA has made changes to the standards relating to reinsurance arrangements and assets with another party that have varying levels of maturity.

APRA had proposed that insurers should deduct any reinsurance assets that did not meet the relevant governing law in a foreign jurisdiction.

But the submissions argued that implementation of this requirement would be difficult due to the various different regulatory frameworks around the world for reinsurance cover in more than one jurisdiction.

APRA has dropped the requirement, but says it will continue to review foreign reinsurance assets as part of its normal supervisory duties.

As for assets held with another party, APRA wanted to introduce additional line reporting for these in insurers’ financial statements.

The regulator says the submissions noted it “would be a significant task which would be both onerous and immaterial from a capital requirement perspective”.

APRA has accepted the argument and will not introduce the standard.

There are also clarifications on actuarial peer review of an insurer’s financial position and the proposal to separate “current tax assets” from “other assets”.

The new prudential standards will come into force on December 1, and insurers must use them for financial reports that are scheduled to be completed during March next year.