APRA releases final prudential practice guide on group insurance arrangements
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The Australian Prudential Regulation Authority (APRA) today released a prudential practice guide that provides guidance on good practices for insurers in relation to group insurance arrangements.
APRA has been working with life insurers over a number of years to improve the sustainability and stability of the group insurance market. Prudential Practice Guide LPG 270 Group Insurance Arrangements (LPG 270) outlines prudent practices in relation to group insurance arrangements with a focus on life insurance provided to Registrable Superannuation Entity (RSE) licensees.
The release of LPG 270 is part of a suite of activities intended to address poor practices that have emerged in the group insurance market, contributing to deteriorating experience for many participants. Over the past few years, APRA has undertaken a coordinated effort to increase its focus on this area, through the release of standards and guidance for RSE licensees and increasing supervisory attention for participants in the market.
Topics covered in LPG 270 include the identification of risks in accordance with an insurer’s risk management framework, responding to tenders and data management. LPG 270 also discusses the implications of Prudential Standard SPS 250 Insurance in Superannuation for insurers. APRA expects the guidance contained in LPG 270 may also be useful to insurers of other types of group insurance arrangements.
APRA Deputy Chairman Ian Laughlin said that over the last few years part of the group insurance market has fallen short of appropriate practice in respect of risk management and governance.
‘The release of this prudential practice guide reflects APRA’s heightened focus on group insurance and forms part of APRA’s response to issues in both the superannuation and life industries,’ Mr Laughlin said. ‘APRA expects industry to continue to improve practices in this market.’
LPG 270 and an accompanying letter can be found on APRA’s website.
The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the financial services industry. It oversees banks, mutuals, general insurance and reinsurance companies, life insurance, private health insurers, friendly societies, and most members of the superannuation industry. APRA currently supervises institutions holding around $9 trillion in assets for Australian depositors, policyholders and superannuation fund members.