AuthorityAuthority

Authority

1. This Prudential Standard is made under section 32 of the Insurance Act 1973 (the Act).

Application

2. This Prudential Standard applies to each:

(a) general insurer authorised under the Act (insurer); and

(b) Level 2 insurance group as defined in Prudential Standard GPS 001 Definitions (GPS 001).

Where a requirement applies to a Level 2 insurance group, the requirement is imposed on the parent entity of the Level 2 insurance group.

3. This Prudential Standard applies to insurers and Level 2 insurance groups (regulated institutions) from 1 January 2013.

4. For the avoidance of doubt, compliance by a Level 2 insurance group with the requirements of this Prudential Standard does not relieve the Board of an insurer within the group from the need to comply with any prudential requirements that are specific to the insurer, unless specifically excluded by a paragraph in this Prudential Standard.

Level 2 insurance groups

5. Certain adjustments to the risk management requirements outlined in this Prudential Standard apply to Level 2 insurance groups. These adjustments are set out in Attachment D.

Interpretation

6. Terms that are defined in GPS 001 appear in bold the first time they are used in this Prudential Standard.

7. For the purposes of this Prudential Standard:

(a) ‘risk management framework’ includes systems (including the structures, processes, policies and roles supporting them) for identifying, assessing, mitigating and monitoring the risks that may affect a regulated institution’s ability to meets its obligations to policyholders;

(b) a reference to the regulated institution’s ‘operations’ is a reference to:

(i) its operations in Australia and overseas through a branch for an insurer; or

(ii) its operations in Australia and overseas for a Level 2 insurance group;

(c) the term ‘auditor’ is used to refer to the Appointed Auditor, Group Auditor and responsible auditor except where otherwise specified; and

(d) the term ‘actuary’ is used to refer to the Appointed Actuary and Group Actuary except where otherwise specified.

Compliance on an insurance group basis

8. Subject to paragraph 9, an insurer that is part of an insurance group may meet certain requirements on a group basis, provided that the Board of the insurer is satisfied that the requirements of this Prudential Standard are met in respect of the insurer. These requirements are: