APRA targets affordability issue
The Australian Prudential Regulation Authority (APRA) has provided an interim update on its supervision and policy priorities for the first six months of the year.
In relation to insurance, APRA will focus on premium affordability and availability, and will continue working with stakeholders to “deepen” understanding of issues making insurance prohibitive in disaster-prone areas.
“Affordability and availability pressures are seen in areas affected by natural disasters and in some commercial lines,” the regulator said. “These pressures can have significant implications for the community and the wider economy.
“APRA is encouraging insurers to achieve an appropriate balance between their financial health and enabling access to affordable and well-designed insurance.”
The regulator’s cross-industry priorities, which apply to insurance, are: cyber resilience; operational resilience; climate risk; the incoming Financial Accountability Regime; governance, culture, remuneration and accountability; and recovery and resolution.
Insurers must comply with the Financial Accountability Regime from March next year and an information package, prepared with the Australian Securities and Investments Commission, will be released early this year, APRA says.
On climate risk, the regulator says its work with the country’s largest general insurers will assess the potential impacts on home insurance affordability out to 2050.