Insurance (prudential standard) determination No. 16 of 2008 - Prudential Standard GPS 221 - Risk Management: Level 2 Insurance Groups
Objective and key requirements of this PObjective and key requirements of this Prudential Standard
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Turn the raw legal text into a practical explanation grounded in Insurance (prudential standard) determination No. 16 of 2008 - Prudential Standard GPS 221 - Risk Management: Level 2 Insurance Groups.
Objective and key requirements of this Prudential Standard
This Prudential Standard aims to ensure that a Level 2 insurance group has systems for identifying, assessing, mitigating and monitoring the risks that may affect the ability of APRA-authorised insurers within the group to meet their obligations to policyholders.
Level 2 insurance groups must maintain a group-wide risk control framework that includes risk management (including capital management), reinsurance management, business continuity management and outsourcing for Level 2 insurance groups.
To meet this Prudential Standard’s requirements, a Level 2 insurance group must:
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have a risk management framework which includes a documented Risk Management Strategy, sound risk management policies and procedures, clearly defined managerial responsibilities and controls, a dedicated risk management function and a documented Business Plan;
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annually review its Risk Management Strategy, and submit to APRA when any material changes are made;
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submit a Risk Management Declaration to APRA on an annual basis;
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submit a Financial Information Declaration to APRA on an annual basis;
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have a Reinsurance Management Framework, which includes a documented Reinsurance Management Strategy, sound reinsurance management policies and procedures, clearly defined managerial responsibilities and controls;
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annually review its Reinsurance Management Strategy, and submit to APRA, when any material changes are made;
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submit a Reinsurance Arrangements Statement to APRA;
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submit to APRA details of the effects of limited risk transfer arrangements entered into by foreign entities within the group;
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ensure that each part of the group has in place Business Continuity Management appropriate to the nature and scale of its operations; and
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ensure that any outsourcing arrangements involving material business activities entered into are subject to appropriate due diligence, approval and on-going monitoring.