About $28.7 million in total levies is set to be recovered from the general insurance industry to support the prudential supervision of the sector, according to a discussion paper from Treasury.

Treasury says the proposed levies for the next financial year represent a 7.1% rise from the $26.8 million that the industry will pay this year.

It says the levies will support the Australian Prudential Regulation Authority’s (APRA) supervisory focus on lessons learnt from COVID, particularly on issues related with business interruption and measures that can be taken to improve resilience of insurance risk across the industry.

APRA intends to continue engaging with key industry stakeholders on issues regarding the affordability and availability of insurance and explore the possibility of winding down some specific COVID response activities where improvements are evident.

Treasury says it will continue to collect a separate levy to cover the cost of operating the National Claims and Policies Database (NCPD), which provides information on public/product liability (PL) and professional indemnity (PI) insurance.

It expects to recover $1 million, up from about $900,000 in the current financial year.

The NCPD levy is based on gross earned PL and PI premium. General insurers that no longer write policies in those two categories but still receive claims relating to previously written policies are classified as “runoffs” and are subject to a flat rate for each category of insurance.

The recovery funds are part of the Financial Institutions Supervisory Levies that will apply for the 2021/22 financial year. The levies are set to recover the majority of the operational costs of APRA and other specific costs incurred by certain Commonwealth agencies such as the Australian Securities and Investments Commissions and Australian Taxation Office.

Closing date for submissions is June 11.

Click here for the discussion paper.