Announcement date
9 March 2023
Link to announcement
Remaking of four life insurance prudential standards
Problem being addressed
The Australian Prudential Regulation Authority (APRA) considers there is the potential for prudential risk to arise if the four standards proposed to be remade are allowed to sunset. APRA certify that the proposed standards are working effectively and remain fit for purpose.
Proposal
The four prudential standards that APRA would like to remake without change before they are due to sunset on 1 April 2023 are:
- Prudential Standard LPS 100 Solvency Standard (LPS 100)
- Prudential Standard LPS 115 Insurance Risk Charge (LPS 115)
- Prudential Standard LPS 360 Termination values Minimum Surrender Values and Paid-up Values (LPS 360)
- Prudential Standard LPS 370 Cost of Investment Performance Guarantees (LPS 370).
LPS 100 and LPS 370 are specifically required by the Life Insurance Act 1995 . LPS 360 prescribes the minimum amount paid by an insurer to a policyholder when a long-term life insurance policy is discontinued. LPS 115, is an essential part of the Life and General Insurance Capital (LAGIC) framework.
Assessed Impact Analysis outcome
Sunsetting instrument
Assessment comments
Consistent with Government’s Regulation Impact Statement requirements for sunsetting instruments, APRA has, after consultation with stakeholders, assessed the standards are operating effectively and efficiently. Therefore, an Impact Statement is not required for the remaking of the standards.
Regulatory burden
No change in regulatory costs.