Prudential and Reporting Standards for Life insurance and friendly societies

The Life Insurance Act 1995 (the Act) sets out requirements for life company directors in relation to the priority to be accorded to the interests of statutory fund policy owners. This prudential practice guide assists life companies in complying with those requirements in relation to conflicts of interest and, more generally, outlines APRA’s views on conflicts of interest.   |  File type: PDF  |  File size: 93.91 KB

This Prudential Standard requires a Level 3 Head to ensure that APRA has access to independent advice from an auditor relating to the operations, internal controls and information provided to APRA in respect of the Level 3 group. In addition, the standard sets out requirements for the roles and responsibilities of the appointed auditor.

This Prudential Standard sets out the roles and responsibilities of a life company’s Auditor. It also sets out the obligations of a life company to make arrangements to enable its Auditor to fulfil his or her responsibilities. The ultimate responsibility for providing impartial advice in relation to the operations, financial condition and internal control of a life company rests with the Auditor. This advice is designed to assist the Board and senior management in carrying out their responsibility for the sound and prudent management of the life company.

This Prudential Standard aims to ensure that a general insurer, life company or private health insurer has access to appropriate actuarial advice to assist in the sound and prudent operation of its business. It sets out the requirements for insurers to appoint an Appointed Actuary and to establish a framework for the provision of actuarial advice. It also sets out the functions of the Appointed Actuary role.

This prudential practice guide was developed to support insurers and actuaries in fulfilling their responsibilities to comply with the requirements contained in CPS 320. Not all practices outlined in this guide will be relevant for every insurer, and some aspects may vary depending upon the size, business mix and complexity of the insurer’s business operations.  |  File type: PDF  |  File size: 503.62 KB

This Prudential Standard sets out minimum foundations for good governance of an APRA-regulated institution in the deposit-taking, general insurance, life insurance and private health insurance industries, and of a Head of a group. Its objective is to ensure that an institution and group is managed soundly and prudently by a competent Board (or equivalent), which can make reasonable and impartial business judgements in the best interests of the institution and group and which duly considers the impact of its decisions on depositors and/or policyholders.

The objective of this Prudential Standard is to ensure that APRA-regulated entities maintain remuneration arrangements which appropriately incentivise individuals to prudently manage the risks they are responsible for, and that there are appropriate consequences for poor risk outcomes.

This PPG sets out guidance for all APRA-regulated entities on remuneration practices, to support Prudential Standard CPS 511 Remuneration (CPS 511). CPS 511 sets out requirements to ensure entities maintain remuneration arrangements which appropriately incentivise individuals to prudently manage the risks they are responsible for, and apply consequences for poor risk outcomes.   |  File type: PDF  |  File size: 735.25 KB

Prudential Standard LPS 520 Fit and Proper (LPS 520) sets out APRA’s requirements in relation to assessing the fitness and propriety of responsible persons of life companies and registered non-operating holding companies (registered NOHCs), collectively referred to as regulated institutions. This prudential practice guide aims to assist regulated institutions in complying with those requirements and, more generally, to outline prudent practices in relation to fitness and propriety.   |  File type: PDF  |  File size: 255.83 KB

This Prudential Standard sets out minimum requirements for APRA-regulated institutions in determining the fitness and propriety of individuals to hold positions of responsibility. Its objective is to ensure that an institution prudently manages the risks that persons acting in responsible person positions who are not fit and proper pose to the institution’s business and financial standing.

In order to assist entities in complying with the requirement to ensure that information provided to APRA remains correct for all responsible persons, the form can be submitted at any time, however it will be provided on an annual basis to all entities submitting annual returns via D2A. Entities can use the annual form to correct and update the information they have provided to APRA throughout the year.  |  File type: PDF  |  File size: 130.35 KB

This Prudential Standard requires an APRA-regulated institution and a Head of a group to have systems for identifying, measuring, evaluating, monitoring, reporting, and controlling or mitigating material risks that may affect its ability, or the ability of the group it heads, to meet its obligations to depositors and/or policyholders. These systems, together with the structures, policies, processes and people supporting them, comprise an institution’s or group’s risk management framework.

This PPG aims to assist APRA-regulated institutions in complying with Prudential Standard CPS 220 Risk Management (CPS 220) and, more generally, to outline prudent practices in relation to risk management.  |  File type: PDF  |  File size: 675.49 KB

This Prudential Standard requires a Level 3 Head to ensure that an aggregate risk exposure external to the Level 3 group does not expose prudentially regulated institutions within the group to excessive risk. The ultimate responsibility for the aggregate risk exposure policy of a Level 3 group rests with the Board of its Level 3 Head.

Prudential Standard 3PS 221 Aggregate Risk Exposures (3PS 221) sets out APRA’s requirements in relation to the aggregation of risks across a Level 3 group. This PPG aims to assist Level 3 Heads to comply with those requirements and, more generally, to outline prudent practices in relation to certain aggregation matters.  |  File type: PDF  |  File size: 503.56 KB

This Prudential Standard requires a Level 3 Head to ensure that associations and dealings within the Level 3 group do not expose prudentially regulated institutions within the group to excessive risk.

Prudential Standard 3PS 222 Intra-group Transactions and Exposures (3PS 222) sets out APRA’s requirements in relation to the associations and dealings between institutions in a Level 3 group. This PPG aims to assist Level 3 Heads to comply with those requirements and, more generally, to outline prudent practices in relation to certain intra-group matters.  |  File type: PDF  |  File size: 505.33 KB

This Prudential Standard requires an APRA covered entity to have appropriate margining practices in relation to non-centrally cleared derivatives. An APRA covered entity must exchange variation margin and post and collect initial margin with a covered counterparty, subject to certain criteria.

This PPG aims to assist an APRA-regulated institution in complying with Prudential Standards CPS 220 Risk Management (CPS 220), SPS 220 Risk Management (SPS 220), CPS 510 Governance(CPS 510), SPS 510 Governance (SPS 510) and, more generally, to outline prudent practices in relation to climate change financial risk management.  |  File type: PDF  |  File size: 1.38 MB

The aim of this Prudential Standard is to ensure that an APRA-regulated entity is resilient to operational risks and disruptions. An APRA-regulated entity must effectively manage its operational risks, maintain its critical operations through disruptions, and manage the risks arising from service providers.

This Variation to CPS 230 is for the purpose of providing regulated entities that are non-significant financial institutions (non-SFIs) an additional period of one year in which to comply with aspects of the standard relating to business continuity and scenario analysis.

The aim of this Prudential Practice Guide is to assist regulated entities in the implementation of, and compliance with, Prudential Standard CPS 230 Operational Risk Management. CPS 230 requires a regulated entity to effectively manage its operational risks, maintain critical operations through disruptions and manage the risks arising from service providers.  |  File type: PDF  |  File size: 434.99 KB

This Prudential Standard is designed to ensure that reinsurance arrangements of life companies are subject to minimum standards of independent oversight by APRA. To that end, it addresses the regular reporting of reinsurance arrangements to APRA, and APRA’s oversight of Referable Reinsurance Arrangements.

Prudential Standard LPS 220 Risk Management (LPS 220) sets out APRA’s requirements for life companies in relation to risk management. This prudential practice guide aims to assist life companies in complying with requirements in relation to operational risk and, more generally, to outline prudent practices in relation to operational risk management.   |  File type: PDF  |  File size: 87.67 KB

This Prudential Standard requires that all outsourcing arrangements involving material business activities entered into by an APRA-regulated institution and a Head of a group be subject to appropriate due diligence, approval and ongoing monitoring. All risks arising from outsourcing material business activities must be appropriately managed to ensure that the APRA-regulated institution, or the group it heads, is able to meet its financial and service obligations to its depositors and/or policyholders.

Prudential Standard APS 231 Outsourcing, Prudential Standard GPS 231 Outsourcing and Prudential Standard LPS 231 Outsourcing (Prudential Standards) set out the Australian Prudential Regulation Authority’s (APRA's) requirements in relation to outsourcing. This prudential practice guide aims to assist regulated institutions in complying with those requirements and, more generally, to outline prudent practices in relation to managing outsourcing arrangements. For the purposes of this guide, ‘regulated institution’ refers to an authorised deposit-taking institution (ADI) or a general insurer or a life company (including a friendly society) regulated by APRA.   |  File type: PDF  |  File size: 85.64 KB

This Prudential Standard requires each APRA-regulated institution and Head of a group to implement a whole-of-business approach to business continuity management that is appropriate to the nature and scale of the operations. Business continuity management increases resilience to business disruption arising from internal and external events and may reduce the impact on the institution’s or group’s business operations, reputation, profitability, depositors, policyholders and other stakeholders.

Prudential Standard LPS 232 Business Continuity Management (LPS 232) sets out APRA’s requirements in relation to business continuity management (BCM) for life companies. This prudential practice guide aims to assist life companies in complying with those requirements and, more generally, to outline prudent practices in relation to BCM.   |  File type: PDF  |  File size: 98.96 KB

This PPG aims to assist regulated institutions in considering and prudently managing the risks posed by a potential influenza pandemic, or any other widespread outbreak of contagious disease that could affect their operations. The information in this guide supports compliance with Prudential Standards CPS 232 Business Continuity Management (CPS 232) and SPS 232 Business Continuity Management (SPS 232), which set out the Australian Prudential Regulation Authority’s (APRA) requirements in relation to business continuity management for authorised deposit-taking institutions (ADIs), general insurers, life companies and registrable superannuation entity (RSE) licensees (RSE licensees). This guide also supports compliance with risk management and other relevant prudential requirements.  |  File type: PDF  |  File size: 268.63 KB

This Prudential Standard aims to ensure that an APRA-regulated entity takes measures to be resilient against information security incidents (including cyber-attacks) by maintaining an information security capability commensurate with information security vulnerabilities and threats.

This PPG aims to assist regulated entities in maintaining information security. It is designed to provide guidance to Boards, senior management, risk management and information security specialists (management and operational).  |  File type: PDF  |  File size: 837.05 KB

This PPG aims to assist regulated entities in managing data risk. It is designed to provide guidance to senior management, risk management and technical specialists (both management and operational). The PPG targets areas where APRA continues to identify weaknesses as part of its ongoing supervisory activities. The PPG does not seek to provide an allencompassing framework, or to replace or endorse existing industry standards and guidelines.  |  File type: PDF  |  File size: 328.44 KB

Prudential Standard LPS 220 Risk Management (LPS 220) sets out APRA’s requirements for life companies in relation to risk management. This prudential practice guide aims to assist life companies in complying with those requirements in relation to insurance risk and reinsurance management and, more generally, to outline prudent practices in relation to good life insurance risk and reinsurance management.   |  File type: PDF  |  File size: 96.71 KB

This PPG outlines prudent practices in relation to group insurance arrangements. The main area of focus is life insurance, total and permanent disability insurance and income protection insurance provided to a registrable superannuation entity (RSE) licensee, for offering to beneficiaries. The insurer for these arrangements is usually a life company but may, for specific types of insurance benefits, be a general insurer. Many of the practices are also relevant for group insurance contracts where the policy owner is not an RSE licensee.   |  File type: PDF  |  File size: 336.21 KB

This Reporting Standard sets out the requirements for the provision of information to APRA by an authorised life company in relation to its claims and disputes data. It includes Form LRF 750.0 Claims and Disputes and associated instructions.

This standard is a prudential standard in relation to solvency for the purposes of sections 3, 52, 62, 63 and 159 of the Life Insurance Act 1995. This Prudential Standard is satisfied in relation to a statutory fund if the capital base of the fund exceeds 90 per cent of the fund’s prescribed capital amount.

This guide assists regulated institutions to develop their Internal Capital Adequacy Assessment Process, including required documents, and to understand APRA’s approach to the supervisory review process for setting supervisory adjustments to required capital. This information supports compliance with Prudential Standard APS 110 Capital Adequacy (APS 110), Prudential Standard GPS 110 Capital Adequacy (GPS 110), Prudential Standard HPS 110 Capital Adequacy (HPS 110) and Prudential Standard LPS 110 Capital Adequacy (LPS 110). These prudential standards set out requirements in relation to the capital adequacy of a regulated institution, including the need for a regulated institution to have an ICAAP, and establish a framework for supervisory review and adjustment of a regulated institution’s capital requirements.(APS 110), Prudential Standard GPS 110 Capital Adequacy (GPS 110) and Prudential Standard LPS 110 Capital Adequacy (LPS 110). These prudential standards set out requirements in relation to the capital adequacy of a regulated institution, including the need for a regulated institution to have an ICAAP, and establish a framework for supervisory review and adjustment of a regulated institution’s capital requirements.   |  File type: PDF  |  File size: 606.94 KB

This Prudential Standard requires a life company to maintain adequate capital against the risks associated with its activities. The ultimate responsibility for the prudent management of capital of a life company rests with its Board of directors. The Board must ensure that the life company maintains an adequate level and quality of capital commensurate with the scale, nature and complexity of its business and risk profile, such that it is able to meet its obligations under a wide range of circumstances.

This Reporting Standard sets out the requirements for the provision of information to APRA relating to a life insurance company’s prescribed capital amount. It includes associated specific instructions and must be read in conjunction with Reporting Standard LRS 001 Reporting Requirements (LRS 001), including the general instruction guide and Prudential Standard LPS 110 Capital Adequacy (LPS 110).

This Reporting Standard sets out the requirements for the provision of information to APRA relating to a life company’s adjustments and exclusions to prudential capital requirements as approved by APRA. It includes associated specific instructions and must be read in conjunction with Reporting Standard LRS 001 Reporting Requirements (LRS 001), including the general instruction guide.

This Prudential Standard sets out the characteristics that an instrument must have to qualify for inclusion in the capital base of a life company and the various regulatory adjustments to be made to determine the capital base for each statutory fund, the general fund and the life company as a whole.

This Reporting Standard sets out the requirements for the provision of information to APRA relating to the determination of a life insurance company’s capital base. It includes associated specific instructions and must be read in conjunction with Reporting Standard LRS 001 Reporting Requirements (LRS 001), including the general instruction guide, Prudential Standard LPS 110 Capital Adequacy (LPS 110) and Prudential Standard LPS 112 Capital Adequacy: Measurement of Capital (LPS 112).

This Reporting Standard sets out the requirements for the provision of information to APRA in relation to a life company’s related party exposures. It includes Form LRF 112.3 Related Party Exposures and associated specific instructions and must be read in conjunction with the general instruction guide.

This Prudential Standard requires a life company to maintain adequate capital against the asset risks associated with its activities. The ultimate responsibility for the prudent management of capital of a life company rests with its Board of directors. The Board must ensure the life company maintains an adequate level and quality of capital commensurate with the scale, nature and complexity of its business and risk profile, such that it is able to meet its obligations under a wide range of circumstances.

This Reporting Standard sets out the requirements for the provision of information to APRA relating to a life insurance company’s Asset Risk Charge. It includes associated specific instructions and must be read in conjunction with Reporting Standard LRS 001 Reporting Requirements (LRS 001), including the general instruction guide, and Prudential Standard LPS 114 Capital Adequacy: Asset Risk Charge (LPS 114).

This Reporting Standard sets out the requirements for the provision of information to APRA relating to a life company’s derivatives activity. It includes Form LRF 114.2 Derivatives Activity and associated specific instructions and must be read in conjunction with the general instruction guide.

This Reporting Standard sets out the requirements for the provision of information to APRA in relation to a life company’s off-balance sheet business. It includes Form LRF 114.3 Off-balance Sheet Business and associated specific instructions and must be read in conjunction with the general instruction guide.

This Reporting Standard sets out the requirements for the provision of information to APRA in relation to friendly society related items. It includes associated specific instructions and must be read in conjunction with Reporting Standard LRS 001 Reporting Requirements (LRS 001).

This Prudential Standard requires a life company to maintain adequate capital against the insurance risks associated with its activities. The ultimate responsibility for the prudent management of capital of a life company rests with its Board of directors. The Board must ensure that the life company maintains an adequate level and quality of capital commensurate with the scale, nature and complexity of its business and risk profile, such that it is able to meet its obligations under a wide range of circumstances.

This Reporting Standard sets out the requirements for the provision of information to APRA in relation to calculating a life insurance company’s Insurance Risk Charge. It includes associated specific instructions and must be read in conjunction with Reporting Standard LRS 001 Reporting Requirements (LRS 001), including the general instruction guide, and Prudential Standard LPS 115 Capital Adequacy: Insurance Risk Charge (LPS 115).

This Prudential Standard requires a life company to maintain adequate capital against the asset concentration risks associated with its activities. The ultimate responsibility for the prudent management of capital of a life company rests with its Board of directors. The Board must ensure that the life company maintains an adequate level and quality of capital commensurate with the scale, nature and complexity of its business and risk profile, such that it is able to meet its obligations under a wide range of circumstances.

This Reporting Standard sets out the requirements for the provision of information to APRA in relation to calculating a life insurance company’s Asset Concentration Risk Charge. It includes associated specific instructions and must be read in conjunction with Reporting Standard LRS 001 Reporting Requirements (LRS 001), including the general instruction guide, and Prudential Standard LPS 117 Capital Adequacy: Asset Concentration Risk Charge (LPS 117).

This Prudential Standard requires a life company to maintain adequate capital against the operational risks associated with its activities. The Operational Risk Charge is the minimum amount of capital required to be held against operational risks. The Operational Risk Charge relates to the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.

This Reporting Standard sets out the requirements for the provision of information to APRA in relation to calculating a life insurance company’s Operational Risk Charge. It includes associated specific instructions and must be read in conjunction with Reporting Standard LRS 001 Reporting Requirements (LRS 001), including the general instruction guide and Prudential Standard LPS 118 Capital Adequacy: Operational Risk Charge (LPS 118).

This Reporting Standard sets out the requirements for the provision of information to APRA in relation to the supplementary information used to calculate a life company’s capital adequacy. It includes associated specific instructions and must be read in conjunction with Reporting Standard LRS 001 Reporting Requirements (LRS 001), including the general instruction guide.

This Prudential Standard establishes a set of principles and practices for the consistent measurement and reporting of policy liabilities for life insurance contracts. The policy liabilities must provide for both a best estimate value of the liabilities and the timely release of profit over the life of the business.

This Reporting Standard sets out the requirements for the provision of information to APRA in relation to calculating a life insurer’s retained profits and policy liabilities for participating business. It includes associated specific instructions and must be read in conjunction with Reporting Standard LRS 001 Reporting Requirements (LRS 001), including the general instruction guide, and Prudential Standard LPS 340 Valuation of Policy Liabilities and Prudential Standard LPS 600 Statutory Funds.

This Reporting Standard sets out the requirements for the provision of information to APRA in relation to a life company’s retained profits. It includes Form LRF 340.1 Retained Profits (SF & SF Eliminations) and Form LRF 340.2 Retained Profits (SF Total, GF, GF Elim, Entity), associated specific instructions and must be read in conjunction with the general instruction guide.

This Prudential Standard sets out the requirements for calculating the cost of investment performance guarantees provided in association with investment-linked contracts for the purpose of section 42 of the Life Insurance Act 1995.

This Prudential Standard sets out requirements for the operations of statutory funds and any restructure of statutory funds, so that they are fair and equitable for policy owners. The ultimate responsibility for the operations of a life company's statutory funds and for following the required procedures in the event of restructuring a life company's statutory funds rests with the life company.

The ultimate responsibility for the establishment, structure and operation of a friendly society's approved benefit funds rests with the friendly society. This Prudential Standard sets out the requirements for the establishment, structure and operation of an approved benefit fund of a friendly society so that it is fair and equitable for its members.

Prudential Standard LPS 700 Friendly Society Benefit Funds (LPS 700) applies to life companies that are friendly societies registered under the Life Insurance Act 1995 (the Life Act). It sets out requirements to ensure that the establishment, structure and operation of a friendly society’s approved benefit funds are fair and equitable for its members.   |  File type: PDF  |  File size: 273.59 KB

The objective of this Prudential Standard is to ensure that all APRA-regulated entities are adequately prepared for scenarios that may impact the financial viability of their business. It requires APRA-regulated entities to develop and maintain a recovery and exit plan, and capabilities to be able to anticipate, manage and respond to periods of stress.

This PPG sets out guidance for all APRA-regulated entities to assist in the implementation of CPS 190. It sets out the key areas of focus that APRA supervisors will have when assessing an entity’s recovery and exit planning.  |  File type: PDF  |  File size: 1.52 MB

The objective of this Prudential Standard is to ensure that APRA-regulated entities can be resolved by APRA in an orderly manner if needed, where bespoke planning and pre-positioning is required. It requires significant financial institutions (SFIs), and non-SFIs that provide critical functions, to support resolution planning when notified by APRA.

This PPG provides guidance to support the implementation of CPS 900. It sets out the outcomes that APRA is seeking to achieve at each stage of the resolution planning process, and the factors that APRA will have regard to in developing a bespoke resolution plan for a particular entity.  |  File type: PDF  |  File size: 955.46 KB

This Reporting Standard sets out the requirements for the provision of information to APRA in relation to a life company’s financial position. It includes associated specific instructions and must be read in conjunction with Reporting Standard LRS 001 Reporting Requirements (LRS 001), including the general instruction guide.

This Reporting Standard sets out the requirements for the provision of information to APRA in relation to a life company’s profit or loss and other comprehensive income. It includes associated specific instructions and must be read in conjunction with Reporting Standard LRS 001 Reporting Requirements (LRS 001), including the general instruction guide.

This Reporting Standard sets out the requirements for the provision of information to APRA in relation to a life insurer’s profit or loss and other comprehensive income. It includes associated specific instructions and must be read in conjunction with Reporting Standard LRS 001 Reporting Requirements (LRS 001), including the instruction guide.

This Reporting Standard sets out requirements for the provision of information to APRA relating to a life insurer’s reconciliations of insurance contract liabilities required by AASB 17 Insurance Contracts. It includes associated specific instructions and must be read in conjunction with Reporting Standard LRS 001 Reporting Requirements (LRS 001), including the general instruction guide.

This Reporting Standard sets out the requirements for the provision of information to APRA in relation to a life company’s retained profits and share capital. It includes associated specific instructions and must be read in conjunction with Reporting Standard LRS 001 Reporting Requirements (LRS 001), including the general instruction guide.

This Reporting Standard sets out the requirements for the provision of information to APRA in relation to a statement of a life company’s policy liabilities. It includes associated specific instructions and must be read in conjunction with Reporting Standard LRS 001 Reporting Requirements (LRS 001), including the general instruction guide.

This Reporting Standard sets out the requirements for the provision of information to APRA in relation to assets backing a life insurer’s insurance and investment liabilities (net of insurance assets) as determined under Accounting Standards AASB 17 Insurance Contracts (AASB 17) and AASB 9 Financial Instruments (AASB 9) for conventional, investment and annuity products. It includes associated specific instructions and must be read in conjunction with Reporting Standard LRS 001 Reporting Requirements (LRS 001), including the general instruction guide.

This Reporting Standard sets out the general instruction guide for providing information under life insurance reporting standards.

This Reporting Standard sets out the general instructions for providing information under reporting standards, including the periods within which information required under reporting standards must be provided to APRA.

Prudential Standard CPS 001 Defined terms (CPS 001) is a prudential standard that supports interpretation of APRA’s prudential framework. CPS 001 centralises defined terms used in the ADI and insurance prudential frameworks within one prudential standard.