International Law

The Australian Prudential Regulation Authority (APRA) has released its draft prudential framework for supervision of general insurance groups.

  The package consists of three draft prudential standards and a discussion paper. The package also responds to recommendations 38 and 39 of the HIH Royal Commission. Initial consultation with the general insurance industry on this topic began in May 2005.

The foundation of APRA's approach to the supervision of general insurance groups is that the group as a whole should meet essentially the same minimum capital requirements as apply to individual general insurers. Being part of a wider insurance group can alter the risk profile of an individual insurer through financial and operational inter-relationships with other group members and through decisions and initiatives taken at group level.

It is intended that the final prudential standards implementing general insurance group supervision will be released in the third quarter of 2008 and will become effective on 1 January 2009.