The Australian Prudential Regulation Authority (APRA) has announced two new regulations, set to take effect this year, aimed at strengthening accountability, governance, and resilience within the insurance sector. The regulations, named FAR and CPS 230, are designed to improve operational standards and increase transparency in the industry.
FAR, the first of the new regulations, focuses on sharpening accountability within insurers. It seeks to clarify responsibility lines to prevent potential issues and ensure greater resilience across the sector. CPS 230, on the other hand, is aimed at strengthening operational risk management, improving responses to business disruptions, and managing risks associated with material service providers for APRA-regulated entities.
Jane Magill, APRA’s Executive Director for General Insurance and Banking, highlighted the importance of these regulations at the Future of Insurance conference. She urged general insurers to act on recent review findings and integrate lessons learned from past natural disasters, particularly Tropical Cyclone Alfred.
Magill emphasized the need for insurers to gain a comprehensive understanding of their business models, supply chains, and accountability structures. Additionally, she called for greater transparency in claims processes to align with public expectations.
With heightened scrutiny on insurers’ responses to natural disasters, Magill noted that the recent cyclone provides an opportunity for the industry to demonstrate its commitment to supporting affected communities. Although the cyclone did not impact the mainland as severely as anticipated, Magill pointed out the significant damage it caused. The industry has already received more than 75,000 claims related to home, motor, and commercial policies.
These new regulatory steps are seen as a proactive move to improve the insurance sector’s resilience and enhance customer trust in its ability to handle disasters effectively.
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