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APRA to resume consultations and issue new insurance licences

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Public consultations on key policy areas such as insurance capital reforms, suspended since late March because of the pandemic, will resume, the Australian Prudential Regulation Authority (APRA) announced today.

The prudential regulator will also begin a two-stage resumption of assessing and issuing of insurance licenses, with the first phase to start next month followed by the second one in March next year. APRA temporarily stopped issuing licenses in April, citing the difficulties new entrants would face in the current business climate.

New licences issued during the first phase will be focused on applicants that are branches or subsidiaries of foreign entities with significant financial resources and a strong operational track record in a similar business. In the second phase, APRA will accept new licence applications from any entity, starting next month.

Other areas where APRA will restart public consultations include a cross-industry prudential standard for remuneration and the prudential standard for insurance in superannuation.

The consultation on insurance capital reforms relates to changes that will be needed when the new accounting standard AASB17 starts in January 2022.

APRA says the resumption of consultations in these areas will provide stakeholders with greater certainty about critical elements of prudential policy and the provision of new licences.

“The onset of COVID-19 necessitated the suspension of many of APRA’s policy and supervision priorities until end-September,” Chairman Wayne Byres said. “We now believe we can restart both policy consultations and licensing activity.

“However, it is neither possible nor desirable to pursue our full policy agenda for the time being. APRA therefore intends to narrow its policy activities in the remainder of this year to a small number of high-priority prudential policy reforms.”