Regulators are likely to pay close heed to “non-core” operations of insurance companies in the wake of the global financial crisis, a leading Australian regulator has told a US audience.

Australian Prudential Regulation Authority (APRA) Executive Member John Trowbridge told a forum of the National Association of Insurance Commissioners in Washington last week that further regulatory oversight is likely following “the lessons from AIG and other financial groups such as Fortis, ING, the Royal Bank of Scotland and HBOS”.

Each of the insurers named became involved in dealing in credit default swaps, which led to them suffering varying financial crises.

Mr Trowbridge says further oversight will include more effective supervision of specialist insurance groups and cross-sectoral financial groups. Alternatively, there could be restrictions on the activities of specialist insurance groups.

He says APRA will take a continued interest in the development of insurance accounting standards and audit practices and group remuneration practices, as well placing greater emphasis on governance and risk management practices in all financial institutions.