The Australian Prudential Regulation Authority’s (APRA) proposal for chief risk officers to be independent of other roles is proving unpopular with general insurers.

The planned regulation will elevate CROs to more senior positions, according to Deloitte Head of Insurance and Actuaries Caroline Bennet.

“One of the main concerns of insurers is the CRO can’t have any other role,” she told insuranceNEWS.com.au. “For small to medium-sized insurers there are cost implications.”

Most insurers have CROs, but they are often in junior positions, reporting to CFOs. APRA wants them to report to CEOs and have access to directors.

“The clarity of the role defined by APRA will make it a senior role in an insurer,” Ms Bennet said. “It will also raise problems with recruitment, because there are not many senior risk professionals around.”

The prudential standard is due to be published early next year, and Ms Bennet does not expect many changes from the draft.

“APRA has said it is willing to consider requests from smaller insurers about meeting all of the requirements. But APRA has strong views on the requirements and that clearly involves the lines of responsibility of the CRO.”

The prudential standard on insurers’ risk management will come into force on January 1 2015.

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