Insurers have raised concerns over the Financial Accountability Regime that will apply to the industry from March 15 next year.

The Insurance Council of Australia says draft key function descriptions for the industry largely replicate ones for authorised deposit-taking institutions (ADI) and include references that are not applicable to general insurers.

For example, words such as “default” and “debt collection” are ADI language and their relevance in the insurance context is not clear, the Insurance Council says in a submission to the Australian Prudential Regulation Authority.

“We question whether several ADI key functions … are applicable in an insurance context and suggest that if not, they should be removed,” the submission said.

“Collections and enforcement (default, debt collections and recovery) also has an ADI focus and may not be relevant as a key function for insurance.”

The prudential regulator and the Australian Securities and Investments Commission are joint regulators of the regime, which began last month for banks and other ADIs.

The Insurance Council submission asks the regulators for clarity on the operation of insurance key functions, saying there are areas where insurers need more guidance. 

Click here for the submission.