Australia: Financial Sector Assessment Program-Technical Note-Insurance Sector: Regulation and Supervision
IMF Staff Country Reports, February 21, 2019
Source details
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- Australia: Financial Sector Assessment Program-Technical Note-Insurance Sector: Regulation and Supervision
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Bibliographic details
- Published: February 21, 2019
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781484398890.002
Summary and scope
- This technical note provides an update on the Australian insurance sector and an analysis of certain key aspects of the regulatory and supervisory regime.
- The note analyzes practice in relation to selected Insurance Core Principles (ICPs) in the context of a wider discussion of key issues in regulation and supervision.
Key findings
- Despite the negative impact of the low interest rate environment, the life insurance industry retains sufficient loss absorption capacity.
- The Australian Prudential Regulation Authority (APRA) has undertaken a comprehensive reform of prudential regulation while improving the consistency of the framework between life and general insurers.
- This focused review confirms that prudential regulation and supervision by APRA is reasonably conservative.
- The risk-based capital framework is reasonably conservative, which facilitates supervisory risk assessments.
- APRA has high technical capacity to conduct effective supervision.
- While there are some gaps in the regulatory regime, APRA seeks to address these through its supervisory process.
Policy recommendations and supervisory focus
- The report recommends that APRA should expand and deepen its scrutiny of group activities, especially those entailing risky investments and material intragroup transactions.
Subject areas and keywords
- Subject: Economic sectors; Financial institutions; Financial sector; Financial sector policy and analysis; Financial services; Insurance; Insurance companies; Stress testing
- Keywords: APRA issues requirement; APRA member; ASIC capability; ASIC commissioner; ASIC employee; ASIC enforcement; ASIC enforcement review taskforce; ASIC IT infrastructure; ASIC resource; CR; data management system; enforcement power; Financial sector; Global; Insurance; Insurance companies; ISCR; risk management; Stress testing; unit trust
Content in this bundle
- 1ausea2019002 - Executive Summary