The Australian Prudential Regulation Authority (APRA) has released a final package of measures it says are designed to "clarify and strengthen" the role of the appointed actuary, including for private health insurers.
All APRA-regulated insurers are required to designate an appointed actuary. Their role is to provide independent advice to boards and senior management on key financial risks.
APRA released two consultation papers on the issue, in June 2016 and September 2017.
It has now released details of two new prudential standards: Prudential Standard CPS 320 Actuarial and Related Matters (CPS 320) and Prudential Standard GPS 340 Insurance and Liability Valuation (GPS 340). They are accompanied by Prudential Practice Guide CPG 320 Actuarial and Related Matters.
According to APRA, the creation of a new cross-industry prudential standard (CPS 320) harmonises the requirements and expectations for appointed actuaries across all insurance sectors, including private health insurance, while still accommodating industry-specific differences.
Executive board member Geoff Summerhayes said: “Under these changes, Appointed Actuaries should be able to maintain greater focus on the most material matters, thereby better protecting the interests of their insurer and its policyholders. The changes are intended to make it easier for insurers to find and retain appropriately qualified professionals to fill this important role.
“APRA developed the standards to address concerns about high turnover and declining seniority among Appointed Actuaries.
“Applying the requirements of CPS 320 and GPS 340 will increase flexibility, streamline requirements and clarify the seniority of the Appointed Actuary within insurers,” he said.
APRA said industry was broadly supportive of the proposed changes but minor modifications were made to the final standards in response to industry feedback. APRA has also extended the implementation time for the new standards until 1 July 2019.
“APRA will continue to work with industry in the lead-up to the implementation date to help insurers establish effective frameworks to accommodate the requirements of CPS 320 and GPS 340,” said Mr Summerhayes.
“However the success of these reforms rests ultimately with Appointed Actuaries, insurers and their boards, which must now reflect on how the Appointed Actuary is used and supported within their organisations, and respond accordingly.”