Objective and key requirements of this PObjective and key requirements of this Prudential Standard

Objective and key requirements of this Prudential Standard

The purpose of this Prudential Standard is to ensure, as far as practicable, that there are sufficient assets in a health benefits fund conducted by a private health insurer to provide adequate capital for the conduct of the health benefits fund in accordance with the Act and in the interests of the policy holders of the fund.
This Prudential Standard requires the private health insurer to demonstrate that the assets of its health benefits fund will be able to meet the liabilities of the fund after a 12 month period, allowing for the future business plans of the fund and adverse circumstances.
The health benefits fund’s compliance with this Prudential Standard is an indication of its future financial strength, on a going concern basis.

The key requirements of this Prudential Standard are:

• that a health benefits fund must maintain required levels of capital;
• that a private health insurer must have, and comply with, a written, board endorsed, capital management policy for each health benefits fund it conducts, and provide this to APRA as soon as is practicable after it has been endorsed; and
• that the board must review the capital management policy at least every two years and as part of each review, consider the insurers access to internal and external capital and the impact on premiums of holding more or less capital than the amount determined.