It might be a bit too late for professionals working through the HIH saga, but APRA has released its latest proposals to reform and modernise prudential regulation of general insurers.

CEO Graeme Thompson said the regulator has been working on the prudential supervision reforms for two years. “It has been our key policy priority and we’re now close to finalising our proposals.”

He expects the new reforms will give Australia “a more effective supervisory regime, and will encourage an upgrading of the industry’s risk management and governance practices.”

“The end result will be a stronger industry with much better protection for policyholders.”

The draft standards are similar to those issued to the industry for comment last year, details of which have been resisted by the Insurance Council of Australia.

The Federal Government announced in November that it will proceed with amendments to the Insurance Act to bring the prudential supervision reforms into law.

The package of reforms issued last week by APRA contains four prudential standards, with the stated aims of achieving:

• more consistent, rigorous and reliable valuation of insurance liabilities, supported by expert actuarial advice;
• capital adequacy requirements that are more sensitive to each general insurer’s risk profile;
• reinsurance arrangements that are suitable to the scale, complexity and business mix of each company; and
• increased focus on corporate governance, ensuring that company boards are well equipped to fulfil their responsibilities to policyholders and other parties.

Federal Financial Services & Regulation Minister Joe Hockey ­– who counts APRA among his responsibilities – will lead the Government team at a May 1 seminar in Sydney, where the prudential standards and proposed amendments will be discussed.