{"id":"F2023L00205","name":"Life Insurance (prudential standard) determination No. 1 of 2023","slug":"life-insurance-prudential-standard-determination-no-1-of-2023","collection":"legislative_instrument","jurisdiction":"commonwealth","status":"in_force","isInForce":true,"actNumber":null,"makingDate":null,"administeringDepartment":null,"currentVersion":{"id":103839,"registerId":"commonwealth-F2023L00205-current","compilationNumber":null,"startDate":"2026-04-03","status":"InForce","reasons":null,"registeredAt":null},"sections":[{"sectionNumber":"Prudential Standard LPS 100 Solvency Sta","sectionType":"part","heading":"Prudential Standard LPS 100 Solvency Standard comprises the document commencing on the following page.","content":"![Commonwealth Coat of Arms](image.001.png)\n\nLife Insurance (prudential standard) determination\n\nNo. 1 of 2023\n\nPrudential Standard LPS 100 Solvency Standard\n\nLife Insurance Act 1995\n\nI, Clare Gibney, a delegate of APRA:\n\n(a) under subsection 230A(5) of the Life Insurance Act (the Act) revoke Life Insurance (prudential standard) determination No. 8 of 2012, including Prudential Standard LPS 100 Solvency Standard made under that Determination; and\n\n    (b) under subsection 230A(1) of the Act, determine Prudential Standard LPS 100 Solvency Standard, in the form set out in the Schedule, which applies to all life companies, including friendly societies.\n\nThis instrument commences on 29 March 2023.\n\nDated: 7 March 2023\n\nClare Gibney\n\nExecutive Director\n\nPolicy and Advice Division\n\nInterpretation\n\nIn this instrument:\n\nAPRA means the Australian Prudential Regulation Authority.\n\nfriendly society has the meaning given in section 16C of the Act.\n\nlife company has the meaning given in the Schedule to the Act.\n\nSchedule\n\n# Prudential Standard LPS 100 Solvency Standard comprises the document commencing on the following page.","sortOrder":0},{"sectionNumber":"Prudential Standard LPS 100","sectionType":"part","heading":"Prudential Standard LPS 100","content":"##### ![Commonwealth Coat of Arms](image.001.png)\n\n# Prudential Standard LPS 100\n\n# Solvency Standard\n\n| Objective and key requirements of this Prudential StandardThis Prudential Standard is made for the purposes of the Life Insurance Act 1995.The Life Insurance Act 1995 makes provision for prudential standards in relation to the solvency of statutory funds.This standard is a prudential standard in relation to solvency for the purposes of sections 3, 52, 62, 63 and 159 of the Life Insurance Act 1995. This Prudential Standard is satisfied in relation to a statutory fund if the capital base of the fund exceeds 90 per cent of the fund’s prescribed capital amount. |\n| ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |\n\n  \n\n### Authority\n\n    This Prudential Standard is made under paragraph 230A(1)(a) of the Life Insurance Act 1995 (the Act).\n\n### Application\n\n    2. This Prudential Standard applies to all life companies including friendly societies (together referred to as life companies) registered under the Act[\\[1\\]](#_ftn1), except where expressly noted otherwise.\n    3. A life company must apply this Prudential Standard separately:\n    (a) for a life company other than a friendly society: to each of its statutory funds; and\n    (b) for a friendly society: to each of its approved benefit funds.\n    4. This Prudential Standard only applies to the business of an Eligible Foreign Life Insurance Company which is carried on through its Australian statutory funds but not otherwise.[\\[2\\]](#_ftn2)\n    5. This Prudential Standard applies to life companies from 1 January 2013.\n    6. This Prudential Standard applies only for the purposes of sections 3, 52, 62, 63 and 159 of the Act. Should these sections cease to contain references to prudential standards in relation to solvency, this Prudential Standard will cease to have effect.\n\n### Interpretation\n\n    7. Terms that are defined in Prudential Standard LPS 001 Definitions appear in bold the first time they are used in this Prudential Standard.\n    8. Unless otherwise indicated, the term statutory fund will be used to refer to a statutory fund of a life company other than a friendly society, or an approved benefit fund of a friendly society, as relevant.\n    9. This Prudential Standard is a prudential standard in relation to solvency for the purposes of sections 52, 62, 63 and 159 of the Act and a direction given to a life company under section 230B of the Act to comply with a requirement of this Prudential Standard is a direction in relation to solvency for the purposes of sections 62, 63 and 159 of the Act.\n\n  \nSolvency requirement\n\n    10. A statutory fund satisfies the requirements of this Prudential Standard if the capital base of the fund exceeds 90 per cent of the fund’s prescribed capital amount.\n\n### Adjustments and exclusions\n\n    11. APRA may, by notice in writing to a life company, adjust or exclude a specific requirement in this Prudential Standard in relation to that life company.","sortOrder":1},{"sectionNumber":"Solvency Standard","sectionType":"part","heading":"Solvency Standard","content":"# Solvency Standard\n\n| Objective and key requirements of this Prudential StandardThis Prudential Standard is made for the purposes of the Life Insurance Act 1995.The Life Insurance Act 1995 makes provision for prudential standards in relation to the solvency of statutory funds.This standard is a prudential standard in relation to solvency for the purposes of sections 3, 52, 62, 63 and 159 of the Life Insurance Act 1995. This Prudential Standard is satisfied in relation to a statutory fund if the capital base of the fund exceeds 90 per cent of the fund’s prescribed capital amount. |\n| ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |\n\n  \n\n### Authority\n\n    This Prudential Standard is made under paragraph 230A(1)(a) of the Life Insurance Act 1995 (the Act).\n\n### Application\n\n    2. This Prudential Standard applies to all life companies including friendly societies (together referred to as life companies) registered under the Act[\\[1\\]](#_ftn1), except where expressly noted otherwise.\n    3. A life company must apply this Prudential Standard separately:\n    (a) for a life company other than a friendly society: to each of its statutory funds; and\n    (b) for a friendly society: to each of its approved benefit funds.\n    4. This Prudential Standard only applies to the business of an Eligible Foreign Life Insurance Company which is carried on through its Australian statutory funds but not otherwise.[\\[2\\]](#_ftn2)\n    5. This Prudential Standard applies to life companies from 1 January 2013.\n    6. This Prudential Standard applies only for the purposes of sections 3, 52, 62, 63 and 159 of the Act. Should these sections cease to contain references to prudential standards in relation to solvency, this Prudential Standard will cease to have effect.\n\n### Interpretation\n\n    7. Terms that are defined in Prudential Standard LPS 001 Definitions appear in bold the first time they are used in this Prudential Standard.\n    8. Unless otherwise indicated, the term statutory fund will be used to refer to a statutory fund of a life company other than a friendly society, or an approved benefit fund of a friendly society, as relevant.\n    9. This Prudential Standard is a prudential standard in relation to solvency for the purposes of sections 52, 62, 63 and 159 of the Act and a direction given to a life company under section 230B of the Act to comply with a requirement of this Prudential Standard is a direction in relation to solvency for the purposes of sections 62, 63 and 159 of the Act.\n\n  \nSolvency requirement\n\n    10. A statutory fund satisfies the requirements of this Prudential Standard if the capital base of the fund exceeds 90 per cent of the fund’s prescribed capital amount.\n\n### Adjustments and exclusions\n\n    11. APRA may, by notice in writing to a life company, adjust or exclude a specific requirement in this Prudential Standard in relation to that life company.","sortOrder":2},{"sectionNumber":"Objective and key requirements of this P","sectionType":"part","heading":"Objective and key requirements of this Prudential Standard","content":"## Objective and key requirements of this Prudential Standard\n\nThis Prudential Standard is made for the purposes of the Life Insurance Act 1995.\n\nThe Life Insurance Act 1995 makes provision for prudential standards in relation to the solvency of statutory funds.\n\nThis standard is a prudential standard in relation to solvency for the purposes of sections 3, 52, 62, 63 and 159 of the Life Insurance Act 1995. This Prudential Standard is satisfied in relation to a statutory fund if the capital base of the fund exceeds 90 per cent of the fund’s prescribed capital amount.","sortOrder":3},{"sectionNumber":"Authority","sectionType":"division","heading":"Authority","content":"### Authority\n\n    This Prudential Standard is made under paragraph 230A(1)(a) of the Life Insurance Act 1995 (the Act).","sortOrder":4},{"sectionNumber":"Application","sectionType":"division","heading":"Application","content":"### Application\n\n    2. This Prudential Standard applies to all life companies including friendly societies (together referred to as life companies) registered under the Act[\\[1\\]](#_ftn1), except where expressly noted otherwise.\n    3. A life company must apply this Prudential Standard separately:\n    (a) for a life company other than a friendly society: to each of its statutory funds; and\n    (b) for a friendly society: to each of its approved benefit funds.\n    4. This Prudential Standard only applies to the business of an Eligible Foreign Life Insurance Company which is carried on through its Australian statutory funds but not otherwise.[\\[2\\]](#_ftn2)\n    5. This Prudential Standard applies to life companies from 1 January 2013.\n    6. This Prudential Standard applies only for the purposes of sections 3, 52, 62, 63 and 159 of the Act. Should these sections cease to contain references to prudential standards in relation to solvency, this Prudential Standard will cease to have effect.","sortOrder":5},{"sectionNumber":"Interpretation","sectionType":"division","heading":"Interpretation","content":"### Interpretation\n\n    7. Terms that are defined in Prudential Standard LPS 001 Definitions appear in bold the first time they are used in this Prudential Standard.\n    8. Unless otherwise indicated, the term statutory fund will be used to refer to a statutory fund of a life company other than a friendly society, or an approved benefit fund of a friendly society, as relevant.\n    9. This Prudential Standard is a prudential standard in relation to solvency for the purposes of sections 52, 62, 63 and 159 of the Act and a direction given to a life company under section 230B of the Act to comply with a requirement of this Prudential Standard is a direction in relation to solvency for the purposes of sections 62, 63 and 159 of the Act.\n\n  \nSolvency requirement\n\n    10. A statutory fund satisfies the requirements of this Prudential Standard if the capital base of the fund exceeds 90 per cent of the fund’s prescribed capital amount.","sortOrder":6},{"sectionNumber":"Adjustments and exclusions","sectionType":"division","heading":"Adjustments and exclusions","content":"### Adjustments and exclusions\n\n    11. APRA may, by notice in writing to a life company, adjust or exclude a specific requirement in this Prudential Standard in relation to that life company.","sortOrder":7}],"analysis":{"kimi_summary":{"content_quality":"ok","complexity_score":3,"scope_assessment":{"changed":false,"description":"This is a straightforward re-enactment of an existing prudential standard. The 2023 determination revokes the 2012 version but maintains the same core purpose and structure — setting a 90% capital adequacy threshold for life insurance solvency. There is no indication of scope creep; it remains tightly focused on its original purpose of ensuring life insurers maintain adequate capital reserves."},"complexity_factors":["Very short document — only 11 operative paragraphs","Minimal defined terms — relies on external definitions in Prudential Standard LPS 001 Definitions rather than defining terms internally","Single quantitative test — the 90% solvency threshold is straightforward with no tiering or conditional calculations","No nested exceptions or complex conditional logic — only one general adjustment power in paragraph 11","Heavy repetition in the provided text — the same content appears multiple times due to formatting issues, but the substantive standard is brief","Cross-references to primary legislation (Life Insurance Act 1995) but no complex interdependencies with other prudential standards in the operative provisions"],"plain_english_summary":"This prudential standard requires Australian life insurers, friendly societies, and eligible foreign life insurers’ Australian funds to hold capital of more than 90% of a calculated “prescribed capital amount,” ensuring they have minimum reserves to meet policy claims. It protects policyholders by reducing insolvency risk, allows APRA to grant limited exceptions, is self‑terminating if the Life Insurance Act changes, and replaces the 2012 standard."},"flash_summary":{"complexity_score":3,"scope_assessment":{"changed":false,"description":"The instrument expressly revokes the earlier LPS 100 and substitutes the new standard (revocation in the instrument preamble). The new text continues to apply to all life companies (including friendly societies), to each statutory/approved benefit fund separately, and sets the solvency threshold at capital base >90% of prescribed capital amount (clause 10; clauses 2–5). No clear expansion or narrowing of the standard’s scope is stated within this instrument."},"complexity_factors":["Per‑fund application requirement (each statutory fund or approved benefit fund must be assessed separately) — (clauses 3(a)–(b))","Key quantitative test uses an externally framed term 'prescribed capital amount' and a capital base comparison (90%) without defining the components in this document — (clause 10; cross‑references to LPS 001 for defined terms at cl.7)","Regulatory discretion allowing APRA to adjust or exclude requirements by written notice creates case‑by‑case variability and administrative interaction — (clause 11)","Cross‑references to multiple provisions of the Life Insurance Act 1995 (sections 3, 52, 62, 63, 159) tie the standard’s operation to statutory concepts beyond this text — (Authority/Application paragraphs)","Limited scope statement (applies only for purposes of listed Act sections) creates dependence on legislative framing and possible change if those Act references are altered — (clause 6)","Administrative actions: revocation of prior standard and formal commencement date require operational implementation by firms and APRA (revocation and commencement statements)"],"plain_english_summary":"This instrument revokes the prior LPS 100 and replaces it with Prudential Standard LPS 100. It requires each statutory (or approved benefit) fund of a life company to hold a capital base exceeding 90% of its prescribed capital amount. It applies to all life companies, including friendly societies, and to the Australian statutory funds of foreign insurers.\n\nIt matters because it sets a clear solvency metric, creates per‑fund compliance obligations, and gives APRA written discretion to adjust or exclude requirements."},"flash_summary_failed":{"failed":true,"reason":"A positive credit balance is required for all requests, including BYOK, so fallback providers remain available. Add credits at https://vercel.com/d?to=%2F%5Bteam%5D%2F%7E%2Fai%3Fmodal%3Dtop-up to continue.","source":"analysis-cron"}},"importantCases":[],"_links":{"self":"/api/acts/life-insurance-prudential-standard-determination-no-1-of-2023","history":"/api/acts/life-insurance-prudential-standard-determination-no-1-of-2023/history","analysis":"/api/acts/life-insurance-prudential-standard-determination-no-1-of-2023/analysis","conflicts":"/api/acts/life-insurance-prudential-standard-determination-no-1-of-2023/conflicts","importantCases":"/api/acts/life-insurance-prudential-standard-determination-no-1-of-2023/important-cases","documents":"/api/acts/life-insurance-prudential-standard-determination-no-1-of-2023/documents"}}