Mackay Chapman September 2023 APRA Update
In this month’s APRA update:
- APRA releases key insurance statistics for June 2023 across different insurance industries;
- APRA removes liquidity add-on for Bendigo and Adelaide Bank; and
- APRA responds to emerging risks in 2023-24 Corporate Plan.
APRA Releases Key Insurance Statistics for June 2023 Across Different Insurance Industries
APRA has released its quarterly insurance performance statistics publication for the June 2023 quarter.
The quarterly life insurance performance statistics publication provides industry aggregate summaries of financial performance, financial position, capital adequacy and key ratios. The statistics cover life, general, health and superannuation.
Read the Life Insurance Performance Statistics here.
Read the General Insurance Performance Statistics here.
Read the Private Health Insurance Performance Statistics here.
Read the Superannuation Performance Statistics here.
APRA removes liquidity add-on for Bendigo and Adelaide Bank
APRA has lifted a liquidity add-on requirement that was placed on Bendigo and Adelaide Bank due to its breaches of APRA's prudential standards on liquidity. In 2020, APRA took action against Bendigo after it repeatedly violated APS 210 Liquidity standards, revealing weaknesses in risk management and accurate reporting of liquidity ratios.
As a consequence, Bendigo had to include a 10% add-on to the net cash outflow part of its Liquidity Coverage Ratio (LCR) calculation, demanding it to hold more liquid assets. However, Bendigo has since conducted a thorough review of its adherence to APRA's liquidity requirements and devised a remediation plan to address the issues. APRA is satisfied with the bank's efforts, leading to the removal of the liquidity add-on, effective immediately.
Read more here.
APRA responds to emerging risks in 2023-24 Corporate Plan
APRA has introduced its latest Corporate Plan with the aim of maintaining the stability and health of the banking, insurance, and superannuation sectors. The plan for 2023-24 reflects changes in risks affecting the global financial system.
New factors influencing APRA's approach include concerns about rising interest rates, high inflation, geopolitical instability, cyberattacks, scams, and increased natural disasters. APRA has also considered lessons from the collapse of Silicon Valley Bank and the takeover of Credit Suisse, along with findings from the Financial Regulator Assessment Authority's assessment of APRA's superannuation industry supervision.
APRA Chair John Lonsdale emphasised that their strategy, based on "protected today" and "prepared for tomorrow", is dynamic and evolving to respond to emerging risks and the changing environment driven by technological innovation.
Key priorities in APRA's plan include:
- Addressing overall risks by enhancing cross-industry stress testing and ensuring that macroprudential policies are suitable for the current environment;
- Focusing more on operational resilience, including cyber resilience, crisis management, and operational risk management, to ensure consistent financial services;
- Evaluating climate-related financial risks, conducting a Climate Vulnerability Assessment for general insurers, and integrating climate risk into APRA's supervision approach; and
- Enhancing transparency in superannuation to offer members better insights into investment performance and focusing on retirement outcomes.
Read more here.
The contents of this article do not constitute legal advice and it is not intended to be a substitute for legal advice and should not be relied upon as such. It is designed and intended as general information in summary form, current at the time of publication, for general informational purposes only. You should seek legal advice or other professional advice in relation to any particular legal matters you or your organisation may have.
