Consulting firm Xceedance says insurers should be planning now for the introduction of key regulatory reforms including a new operational risk management standard. 

Australian Prudential Regulation Authority (APRA) Chairman John Lonsdale recently highlighted that the standard, CPS 230, will start on July 1 next year. 

The standard aims to strengthen the resilience of insurers and agencies to manage and respond to operational risks and disruptions, such as those posed by covid, technology issues and natural disasters. 

Xceedance Business Leader Prateek Vijayvergia says APRA expects material service providers and critical operations to be identified by the middle of this year, with tolerance levels set by year end. 

“There’s a lot of work to be done to ensure compliance, so advance preparation is vital,” he said.  

“Insurers and underwriting agencies must budget for the changes required and develop capability to use tools and technology to enable them to manage compliance requirements cost effectively.” 

Mr Lonsdale told a federal parliamentary committee last month that the regulator’s priorities this year include operational and cyber resilience, reflecting a growing reliance on digital technologies, and continuing to balance insurer financial sustainability with the need to enhance affordability and availability. 

In other changes ahead, the Financial Accountability Regime will come into effect from March next year for the insurance industry. 

“The upward trajectory for regulatory reform will continue and the industry must make managing change a core competency,” Mr Vijayvergia said.