
APRA releases risk requirements for general insurers
Daily news headlines
SYDNEY – The Australian Prudential Regulation Authority (APRA) has released a consultation package that sets out its draft prudential requirements for the use of the internal model-based method (IMB method) of determining the minimum capital requirements for general insurers.
The package consists of a draft prudential standard, a prudential practice guide and a related discussion paper. The draft Prudential Standard GPS 113, Capital Adequacy: Internal Model-based Method, reflects developments in relation to the use of internal models that have occurred since APRA's internal model requirements for general insurers were first introduced in 2002. It also follows the principles and concepts developed for internal models in authorised deposit-taking institutions under the Basel II Framework. There are, however, differences of detail and emphasis because the nature and significance of the risks in the two industries are not the same. APRA's proposed approach is also consistent with the guidelines issued by the International Association of Insurance Supervisors, which supports the use of internal models for determining regulatory capital requirements.
APRA member John Trowbridge said a key element of APRA's supervision is to encourage better risk management, and that the use of internal models to assess risk and economic capital can be a valuable tool for this. “The underlying purpose of allowing an insurer to determine its minimum capital requirement based on its internal model is to have capital requirements that better reflect the nature and extent of risks in the insurer's particular business structure and business mix. From a supervisory perspective, the objective is for insurers to understand and manage their risks better, and thereby reduce the risk of failure.”
Comments are requested by August 15, 2008. APRA intends to release the final prudential standards implementing the IMB method for general insurers at the same time as its final prudential standards for the supervision of consolidated general insurance groups. Both the packages are expected to be released in the fourth quarter of 2008 and will become effective on January 1, 2009.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on Risk management
Ion cyber outage continues as banks rely on workarounds
ABN Amro, Macquarie, RBC among firms hit; ransom deadline tomorrow, but service may be down for days
Grim repo warning spotlights BNP Paribas booking model
Federal regulators may be targeting French bank’s Paris-based book of US Treasuries
Lifetime achievement award: Stephen Kealhofer
Risk Awards 2023: KMV co-founder helped usher in a new era of credit risk analysis – at banks and investors
Risk Awards 2023: The winners
BNP Paribas takes top derivatives prize, lifetime award for Stephen Kealhofer, Nomura wins rates
Markets Technology Awards 2023: This year’s model
Vendors are offering greater modelling flexibility. What if that’s not enough?
Op risk data: Wells Fargo walloped to the tune of $1.7bn
Also: AML breaches at Danske and Santander; Russia’s Radiotechbank scammed. Data by ORX News
Court allows lawsuit against Credit Suisse to proceed
Shareholder alleges board and senior execs breached fiduciary duties by failing to oversee risk
NSCC and OCC to enhance co-operation on large cash calls
New deal would improve management of options expiries, but will stop short of cross-margining