The argument of principles versus prescription-based regulation – or, in other words, rules – is a hot topic around the world, according to Australian Prudential Regulation Authority (APRA) Executive Member John Trowbridge.

Speaking at the Insurance Council of Australia's regulatory seminar last week, Mr Trowbridge said APRA supports putting more emphasis on interpretation and flexibility when it comes to regulation. That means more reliance on the entire board of an insurer.

Mr Trowbridge believes there should be more reliance on board members generally, rather than on one or two experts employed specifically for risk management.

“We want boards to live and breathe risk management,” he said. “They shouldn’t be just ticking the boxes – they should understand the whole risk management approach.”

He says insurance company boards are increasingly taking on a range of talents and backgrounds because of consolidation. Not all board members come from an insurance background, and they may offer alternative strengths in banking or general financial services.

“We don’t expect every board member to be an expert on insurance, but there is a clear need to be competent,” Mr Trowbridge said.