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APRA Compliance

The changes to the regulation of general insurers implemented by APRA in July 2002 can have a significant impact on the profitability of insurers. Learn about the changes, and how Aon's services and models can help you.

In May 2005 APRA released three discussion papers outlining further proposals for Stage 2 General Insurance Reforms. These reforms follow proposals outlined in an initial discussion paper, Prudential Supervision of General Insurance - Stage 2 reforms, which was released by APRA in November 2003.

The proposals have a number of significant reinsurance implications. These include:
Declarations attesting to the documentation of an insurer's reinsurance arrangements to be prepared and submitted to APRA.
Asset concentration thresholds that limit an insurer's exposure to a reinsurance counterparty based on the rating of the counterparty.
Risk and reinsurance management requirements at a group-wide level.

APRA intends that many of the proposals will start to take effect from January 2006, with the remainder commencing in 2007.

Aon Re Australia have prepared the discussion paper which contains a summary of the proposals outlined in all three discussion papers. We trust you will find its contents to be both useful and informative.

Aon has analysed the issues associated with the changes, and their potential impact. To help you not only comply with the new regulation, but also gain a competitive advantage, we offer a range of services and models:

• capital adequacy - using catastrophe modelling , capital risk management and modelling , and alternative risk financing strategies to assess and lower the amount of capital required
• liability valuation - using treaty reinsurance to reduce volatility
• risk management - providing general advice on risk management for insurers (and other APRA-regulated institutions) and sample of policies.
• reinsurance arrangements - advice in best practice and tools to benchmark security - Aon Re's Security Ratings Index™

If you would like to know more about APRA Compliance, please contact Reg Campbell via e-mail: reg.campbell@aon.com.au or telephone: 61 (2) 9650 0321.