On July 1 APRA’s General Insurance Reform Act was introduced and with it many smaller general insurers disappeared from the market. Australia’s authorised insurers dropped from 146 to 111. Some insurers voluntarily handed back their licences and ceased trading.

The GI Reform Act increased insurers’ capital adequacy levels from $2 million to $5 million. APRA’s standards now require insurers to also have better reinsurance and risk management strategies, place them under stricter corporate governance requirements and put greater emphasis on the role of actuaries.

In October APRA called for even tougher reforms for the general insurance industry. In a submission to the HIH Royal Commission, APRA said its first batch of general insurance reforms had not gone far enough. The planned amendments include increasing APRA’s enforcement powers and independence and its capacity to deal with insurance activities that presently do not fall within the scope of the Insurance Act.