APRA plans to align its capital and reporting frameworks with AASB 17

The Australian Prudential Regulation Authority (APRA) is consulting on its plans to update its insurance capital and reporting frameworks for life, general and private health insurance to align, where appropriate, with the new insurance standard, AASB 17 Insurance Contracts.

Comments on APRA’s Discussion Paper, Integrating AASB 17 into the capital and reporting frameworks for insurers and updates to the LAGIC framework close 31 March 2021.

APRA’s prudential capital and reporting framework is based on current accounting standards, so it is vitally important for it to update these to reduce the dual regulatory burden for the industry because failure to do so will mean insurers will have to maintain two sets of records, that is, two systems for valuations, actuarial, accounting and reporting, with additional costs to policyholders.

APRA is also updating the Life and General Insurance Capital (LAGIC) framework, given it has not been substantively reviewed since it was implemented in 2013. The proposals are not expected to significantly change minimum capital requirements or materially impact premiums.