APRA releases response paper on risk management consultation for private health insurers

The Australian Prudential Regulation Authority (APRA) today released a response to submissions paper to the consultation, begun in December 2016, to apply APRA’s cross-industry Prudential Standard CPS 220 Risk Management (CPS 220) to private health insurers.

Along with the response paper, APRA today also released revised versions of CPS 220 and the accompanying prudential practice guide, which from 1 April 2018 will apply to private health insurers as well as authorised deposit-taking institutions, general insurers and life insurers.

A revised version of Prudential Standard HPS 001 Definitions (HPS 001), has also been updated and released today to include key terms contained in CPS 220.

The consultation on CPS220 found general agreement within the private health insurance (PHI) industry that adoption of the risk management standard would strengthen risk management practices and the capacity of private health insurers to identify and mitigate key risks.

APRA Member Geoff Summerhayes said APRA was pleased to include private health insurers in CPS 220 as the first step in an ongoing review of the PHI prudential framework designed to ensure that private health insurers are resilient in the face of current and emerging risks.

‘APRA places significant importance on sound risk management practices to the prudent operation of all financial institutions, including private health insurers. Application of CPS 220 to the PHI industry will reinforce steps private health insurers have taken in recent years to strengthen their risk management practices and ensure that the strengthening is continued over the longer term.’

Refer to APRA’s response to submissions paper and the revised versions of Prudential Standard CPS 220 Risk Management (CPS 220), Prudential Practice Guide 220 Risk Management (CPG 220) and HPS 001.