Risk insurers believe the new capital standards being proposed by the prudential regulator could increase minimum capital requirements and add unnecessary complexity for firms operating in the Australian insurance industry.

About 400 delegates attended an insurance capital review seminar in Sydney last week to learn more about proposed capital standards scheduled to take effect in 2012.

Speaking on his last day in the role, Australian Prudential Regulation Authority (APRA) Executive Member John Trowbridge says the proposals seek to improve the risk-sensitivity and appropriateness of capital standards, improve the alignment of the standards between industries and consider the standards in light of international developments.

APRA hosted the seminar with the Insurance Council of Australia and the Investment and Financial Services Association.

Speaking during a panel session, QBE Group Chief Risk Officer George Thwaites said initial impressions indicated the changes were likely to put upward pressure on minimum capital requirements for general insurers.

He says the proposals also introduce “more risk sensitivity which we can all agree is an obvious goal. The devil will be in the detail.”

But Commonwealth Bank Chief Actuary Wealth Management Jennifer Lang says change is necessary in the prudential regulation of life insurance where “standards are not always very risk-sensitive”.

However, she raised concern any new regulations would add further complexity to regulatory demands faced by the local industry.