The Australian Prudential Regulation Authority (APRA) plans to increase financial services industry levies from $99.2 million in the current financial year to $112.9 million in 2012/13.

A Treasury discussion paper cites increased supervision due to financial uncertainty as the reason for the increased cost recovery.

“APRA has maintained its heightened level of supervisory intensity throughout this period [of financial uncertainty] and has also pursued a substantial prudential policy agenda,” the discussion paper says.

“APRA’s activities will continue at this tempo in 2012/13. Its supervisory oversight will focus, in particular, on how regulated institutions adapt to the continued caution of households and much of the business sector. 

“This will test the strategic ambitions of regulated institutions accustomed to more buoyant conditions.”

The regulator plans to collect $22.3 million in levies from the general insurance industry next financial year, slightly down from the $22.7 million for the current financial year.

The figure includes $2.9 million given to the Australian Securities and Investments Commission to cover its supervisory costs in this segment.

“In 2012/13, APRA will continue to apply its specialist skills to issues of insurance risk, liability valuations and the quality of reinsurance cover, particularly in view of the recent spate of natural disasters,” the paper says. 

“Prudential policy work will include enhancements to general insurance capital requirements.”

The life insurance industry will pay far less than the general insurance industry, with APRA planning to collect $12.9 million during 2012/13 compared to $12.8 million in the 12 months ending June 30 this year.

“In 2012/13, APRA will continue its focus on the capital adequacy of life insurers given the continued volatility in investment markets, and will be implementing fundamental changes to life insurance capital standards,” the paper says.

The closing date for submissions on the paper is June 15.