Business may be exempt from some Australian Prudential Regulation Authority (APRA) regulatory requirements during any national health pandemic to help regulated institutions through the crisis.

GM David Lewis told a meeting of business leaders in Sydney last week that APRA would suspend its supervisory role during a health scare and focus on monitoring economic indicators such as company cash flow.

Speaking at a business continuity conference in Sydney, Mr Lewis said action by APRA would vary depending on the severity of a pandemic.

“Obviously, regulated institutions would be expected to keep APRA up to date on issues affecting their financial condition and report any material disruptions to their business.”

He says a review of the financial services sector showed most companies are well advanced in their pandemic preparations.

An influenza pandemic such as one deriving from bird flu would have a big effect on the financial sector, disrupting everything from cash supply to credit access, payroll processing and insurance claims processing.

Bird flu, identified as the H5N1 virus, has claimed 168 lives in 277 reported cases since 2003. More than 60 cases have been in Indonesia, and Mr Lewis says any prolonged disruption to these sorts of services would have a significant impact, “not only on the financial institutions that provide them, but also on the wider community”.

APRA predicts a heavy financial toll on the insurance sector in the event of a pandemic, including increased claims in life insurance, business interruption, workers’ compensation, disability and unemployment insurance, and consumer credit insurance.

Mr Lewis said the results of an insurance sector “stress test” to assess companies during a moderate and extreme pandemic are being analysed.