Australia’s onerous regulatory regime is holding back local insurers that want to pursue offshore opportunities, the Insurance Council of Australia (ICA) says.

In uncharacteristically blunt terms, ICA has told the Productivity Commission’s study into barriers to services exports that the Australian Prudential Regulation Authority (APRA) in particular places regulatory zeal before competition interests.

“In recent years, APRA’s early adoption of international prudential reforms is likely to create a competitive disadvantage for Australian general insurers when the minimum capital requirements in Australia are significantly higher than those of our competitors,” the submission says.

ICA also claims APRA takes “an overly conservative view” of joint venture investments in Asia, by placing a greater weighting on their associated risks than their economic value.

“APRA’s view of joint venture investments is at odds with the Government’s vision of positioning Australia as a leading financial services centre in the Asia-Pacific region.”

The council says Australian insurance companies are missing out on the “vast potential” arising from integration of global markets for financial products and services. It notes only three of the 19 insurers domiciled in this country operate outside Australia.

It argues regulators must have “greater regard for the impact of regulations on the competitiveness” of companies. This is particularly relevant given the growing importance of the Asia-Pacific market.

“It is vital that Australia has a regulatory framework that allows business to respond to challenges and developments in the international marketplace,” the submission says. “Regulators should be encouraged to take a global view in their deliberations.”

APRA has declined to respond to the criticisms.