Plans to place the same risk management rules on insurers and banks are too rigid and may inflict excessive costs on smaller insurers, according to the Actuaries Institute.

“The level of prescription as currently set out in the [proposed] standard risks imposing unreasonable costs on some smaller, less-complex insurers, including branches of overseas insurers,” it says in a submission.

It comes after the Australian Prudential Regulation Authority (APRA) released a discussion paper in May proposing a range of risk management rules across industries, including a requirement to appoint an independent chief risk officer.

The regulator should exempt some small insurers, in the same way some smaller businesses are not required to have an appointed actuary, the institute says.

“This would preserve the main benefit of APRA’s proposed changes for larger, more complicated businesses.”

It says more guidance is required on the chief risk officer role and the way it interacts with the appointed actuary.

The standards should take a more principles-based approach that allows for individual institutions to take actions more suited to their size, business mix and complexity, the institute says.