General and life insurers will no longer need to seek Australian Prudential Regulation Authority (APRA) approval for reductions in preference equity and subordinated debt.

The cost of requesting the approvals outweighs the supervisory benefits, APRA says in a letter to insurers. However, the regulator will maintain its approval role for the reduction of capital arising from share dividend payments.

The move follows a submission to APRA on the Basel III reforms, which come into effect next July 1. APRA is expected to release final prudential standards for insurers’ capital next month.