APRA finalises changes for new accounting standard

3 April 2023

The Australian Prudential Regulation Authority (APRA) has finalised changes proposed for several prudential standards as a result of new accounting rules that take effect this year.

APRA announced a targeted consultation on additional requirements after last year releasing changes to capital and reporting frameworks in response to the start of AASB17 Insurance Contracts, which is the Australian equivalent of IFRS 17.

In a letter to general, life and private health insurers last week, Deputy Chair Helen Rowell says eight submissions were received and following consideration of feedback APRA believes the extra requirements remain necessary to ensure sufficient regulatory capital levels.

“The current consultation has confirmed that the policy setting is appropriate for the vast majority of entities,” she says.

APRA has finalised the prudential standard amendments without further revision and has incorporated them into GPS 110 Capital Adequacy, GPS 112 Capital Adequacy: Measurement of Capital, LPS 112 Capital Adequacy: Measurement of Capital and HPS 112 Capital Adequacy: Measurement of Capital.

Ms Rowell says the regulator will consider applications for transitional relief from insurers on a case-by-case basis.

“APRA will also continue to monitor implementation of the revised requirements to ensure they remain fit for purpose and do not impose undue regulatory burden,” she says.

APRA also received feedback on other aspects of the final package, releasing revised versions of GPS Reinsurance Management and LPS 177 Capital Adequacy: Asset Concentration Risk Charge.

The standards take effect on July 1.