The Australian Prudential Regulation Authority (APRA) has dismissed requests for more clarity in its supervision framework for insurance conglomerates.

Industry submissions on the draft regulations suggested various key terms add complexity to the requirements, especially in applying cross-industry prudential standards throughout a group.

There were also concerns group-wide application may be in conflict or overlap local requirements for overseas jurisdictions.

The regulator agrees there is some complexity in expressing requirements that apply to an individual institution.

“APRA reviewed this terminology but has not made any changes,” it says in a letter to the industry. “It is necessary to achieve appropriate differentiation between the various institutions to which different parts of APRA’s prudential framework applies.”

It says group leaders must ensure requirements are applied appropriately.

“APRA expects the head of a group will form a view about how to apply the requirements to institutions within the group – including institutions that are not APRA-regulated.

“It is the responsibility of the head of a group to make assessments of materiality, because this will differ across institutions.”

APRA has also ruled out changes to the risk management framework, director independence or joint venture supervision for conglomerates.

And it has deferred until next year further consultation on capital requirements for conglomerates, waiting for a number of other domestic and international policy initiatives to be in place.

Chairman Wayne Byres says the group governance and risk management requirements will further strengthen conglomerates by enhancing oversight of systemic risks.

The new prudential standards will take effect from July 1 next year. Before then APRA will formally determine the heads and members of each of the eight Level 3 conglomerates.

The conglomerates are AMP, ANZ, Challenger, Commonwealth Bank, Macquarie Group,

NAB, Suncorp and Westpac.