APRA targets insurance affordability challenge
The Australian Prudential Regulation Authority (APRA) will keep up with its ongoing work on addressing insurance affordability and availability issues as part of its supervision priorities for the year.
Cyber resilience and climate-related risks are also a key focus, according to APRA’s Supervision Priorities Information Paper for 2023.
The paper says ongoing natural disasters have “compounded” the difficulty of access to affordable general insurance for homeowners and businesses in areas more vulnerable to severe weather events and pressure on some commercial lines, such as public liability, also continues.
“The problems are complex and potential solutions are multi-faceted, requiring a collaborative approach across industry, regulators, government and consumers,” APRA says.
“Accordingly, APRA has increased its engagement with stakeholders, and this will continue over the next 12 months.”
The regulator says consultation will commence during the year for its Insurance Data Transformation project as part of the first phase of broader and more granular data collections.
“APRA will closely coordinate data collection plans with other government agencies and will contribute to developing evidence-based insights into areas of concern such as insurance availability and affordability,” the paper says.
On cyber, APRA says strong board oversight of organisational capability and preparedness is essential in improving resilience after large breaches last year impacted millions.
The regulator will exercise heightened supervision and rigorously pursue breaches; require and review comprehensive remediation plans to ensure timely rectification and follow up of all gaps identified; conduct targeted deep-dive reviews on areas of weakness that fail to meet expectations; and share insights and industry-wide guidance to direct cyber resilience uplift.
APRA Chair John Lonsdale says the year will bring a “lighter” policy load for the regulator after several years of regulatory reform.
“This will help regulated entities focus on embedding prior major reforms such as capital reforms in banking and insurance, as well as responding to challenges in the operating environment in the period ahead,” he said.
“We will continue to lean into key supervision priority areas. Operational resilience, including cyber preparedness, continues to grow in importance as a supervisory priority, with the significant data breaches at Optus and Medibank late last year underscoring just why.
“We have important work to do on climate risk, governance, culture and recovery planning while the superannuation sector can expect no let-up in our efforts to expose and eradicate underperforming products or actions that are contrary to members’ best interests.”
