The Australian Prudential Regulation Authority (APRA) intends to focus on insurance affordability challenges and climate risks facing the industry in the next few years.

APRA says in its Corporate Plan 2021-25 that it is also working to ensure insurers strengthen governance and risk management practices, including in response to the lessons learned from COVID-19.

The regulator is seeking to beef up its resolution and crisis management capability. It is looking too at making sure there are recovery plans in place across the Australian insurance sector, prioritising insurers facing higher risks and those of greater systemic importance.

APRA says the industry remains well-capitalised but points out exposure to business interruption losses is a key risk in the short to medium-term.

“After narrowing our focus last year to help support the [financial] industry through the early stages of the pandemic, our latest Corporate Plan once again widens APRA’s regulatory gaze and activities,” Chairman Wayne Byres said.

“With no sign of an imminent end to the COVID crisis, helping regulated entities and their customers through the pandemic and ensuring the financial system’s stability remain immediate priorities, but they are not the only challenges on the horizon.

“As the financial sector rapidly evolves, our updated Corporate Plan aims to ensure APRA and its regulated entities remain equipped to deal with existing, emerging and future trends and risks – whether it be the growing spectre of cyber-threats, continued access to affordable insurance, or the emergence of new technologies and market disruptors.”

Click here for the APRA corporate plan.