March 2018
APRA reveals vision for private health insurance
Overview
APRA in February announced a package of proposed measures designed to improve governance and decision-making in the private health insurance sector. The regulator said it would consult industry on the package, titled Governance, fit and proper, audit and disclosure requirements for private health insurers, which aims to introduce stronger prudential standards.
APRA is seeking to: replace Prudential Standard HPS 510 Governance with the more forceful cross-industry equivalent standard, Prudential Standard CPS 510 Governance, to strengthen governance practices; extend cross-industry Prudential Standard CPS 520 Fit and Proper to ensure the competency and integrity of anyone exercising material influence over a private health insurer; introduce HPS 310 Audit and Related Matters in recognition of the important role auditors can play regarding prudential soundness; and revoke Prudential Standard HPS 350 Disclosure to APRA to streamline reporting.
The package heralds the start of phase two of APRA’s roadmap for comprehensively reviewing the prudential framework for private health insurance, launched in August 2016. The third phase, examining the industry’s capital standards, is likely to commence later this year.
This article comprises excerpts from a February 2018 speech by APRA’s executive board member Geoff Summerhayes to the Members Health Fund Alliance, an association of the smaller not-for-profit, member-owned, regional and community-based health funds.
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Learning objectives
After reading this article, you should be able to:
- assess the state of Australia’s private health insurance sector
- discuss APRA’s changes to bolster industry resilience and performance
- explain how member growth is impacting on both small and large funds
- summarise APRA’s policy road map on private health insurance.
Knowledge areas and accreditation
Knowledge area: General Insurance (45 minutes/0.75 points)
FPA CPD points 0.75 Dimensions: Capability, Critical Thinking (FPA 009785).
AFA CPD points 0.75 (AFA 01022009).
CPA Australia CPD points 0.75 (CPA 000488).
TPB CPE (45 minutes/0.75 points).