The Australian Prudential Regulation Authority (APRA) has written to general insurers about its plans to clarify capital implications from the new government-backed cyclone reinsurance pool.

APRA has released draft amendments to four prudential standards, with comment sought by June 1, ahead of the planned July 1 start to the reinsurance scheme.

The changes include amending the definition of an APRA-authorised reinsurer to include the Australian Reinsurance Pool Corporation, which will administer the pool.

The cyclone pool is backed by a $10 billion government guarantee, while a mechanism also provides for an increase in the cap, if required, to ensure all obligations are met.

The prudential standard amendments focus on clarifying the capital treatment of reinsurance within the pool so that it’s not treated differently to a highly rated APRA authorised reinsurer.

“The proposed changes ensure reinsurance recoverables are not subject to a capital charge in recognition of the Australian Government guarantee of the ARPC and seek to reduce burden where appropriate,” APRA Deputy Chairman Helen Rowell says in the letter.