Insurance (prudential standard) determination No. 8 of 2008 - Prudential Standard GPS 220 - Risk Management
Other notification requirementsOther notification requirements
Start here
Get a plain-English read of Other notification requirements
Turn the raw legal text into a practical explanation grounded in Insurance (prudential standard) determination No. 8 of 2008 - Prudential Standard GPS 220 - Risk Management.
Where an insurer conducts insurance business outside Australia, it must notify APRA, in writing, if it becomes aware that:
(a) its right to conduct business in that jurisdiction has ceased; or
(b) its right to conduct insurance business has been limited by a law of the jurisdiction in which the business is being conducted; or
(c) its right to conduct insurance business has been otherwise materially affected under a law of the jurisdiction in which the business is being conducted; or
(d) its right to conduct insurance business has otherwise been withdrawn.
Written notification must be provided to APRA within 10 business days of the event occurring.
Determinations made under previous GPS 220
An approval, determination, direction or requirement made by APRA under a provision specified in Column 1 of the following table that is in operation immediately prior to the commencement of this Prudential Standard is taken, on and from the effective date, to have been made under the provision of this Prudential Standard specified in the same row of Column 2 of the table.
Column 1: Provision of Prudential Standard GPS 220 Risk Management made on 9 February 2006
Column 2: Provision of this Prudential Standard
Paragraph 21(a): require one or more insurers within an insurance group to prepare and submit a separate RMS.
Paragraph 32(a)
Paragraph 21(b): require the preparation and submission of an RMS for a different insurance group within a corporate group.
Paragraph 32(b)
Paragraph 30(a): require one or more insurers within an insurance group to prepare and submit a separate Risk Management Declaration.
Paragraph 41(a)
Paragraph 30(b): require the preparation and submission of a Risk Management Declaration for a different insurance group within a corporate group.
Paragraph 41(b)
Attachment A
Matters to be included in a run-off plan
For the purposes of paragraph 27 of this Prudential Standard, the following matters must be included in a run-off plan, where relevant:
Matters to be addressed in a run-off plan (to be prepared by run-off insurer)
Areas to be reviewed and assessed by Appointed Actuary[5]
(a) Business overview, including details of significant changes to the insurer’s liability portfolio, assets, capital position or operating environment
Significant issues or material anomalies
(b) Details of the insurer’s recent experience, including the profitability for the most recent year
Significant variations between actual and expected experience and the adequacy of past estimates
(c) Assessment of the insurer’s expected future claims run-off experience on a rolling three year basis
Appropriateness of the insurer’s expected future claims run-off assessment
(d) Details of the insurer’s asset and liability management processes, including the insurer’s investment and liquidity strategies
Appropriateness of the insurer’s asset and liability management processes, and investment and liquidity strategies, in light of the expected future claims run-off
(e) Details of the insurer’s current and projected future capital adequacy and a discussion of the insurer’s approach to capital management
Appropriateness and reasonableness of the assumptions used for the capital projections and for scenario/stress testing
(f) Assessment of the suitability and adequacy of reinsurance arrangements, including recoverability of reinsurance, documentation of reinsurance arrangements and the existence and impact of any limited risk transfer arrangements
Appropriateness of the insurer’s reinsurance arrangements in light of the expected future claims run-off
(g) Details of the insurer’s risk management framework
Suitability and adequacy of the risk management framework
Attachment B
Risk Management Declaration
The Board must (by the time provided for in paragraph 37 of this Prudential Standard) provide APRA with a Risk Management Declaration stating that, to the best of their knowledge and belief having made appropriate enquiries:
(a) the insurer has systems in place for the purpose of ensuring compliance with the Act, the Regulations, prudential standards, the Collection of Data Act, reporting standards, authorisation conditions, directions and any other requirements imposed by APRA, in writing;
(b) the Board and senior management are satisfied with the efficacy of the processes and systems surrounding the production of financial information at the insurer;
(c) the insurer has in place an RMS, developed in accordance with the requirements of this Prudential Standard, setting out its approach to risk management;
(d) the insurer has in place a REMS, developed in accordance with Prudential Standard GPS 230 Reinsurance Management, for selecting and monitoring reinsurance programs;
(e) the insurer has, over the last financial year, substantially complied with its RMS and REMS and that these strategies are operating effectively in practice, having regard to the risks they are designed to control; and
(f) copies of the insurer’s current RMS and REMS have been lodged with APRA.
Attachment C
Financial Information Declaration
The CEO and the CFO must (by the time provided for in paragraph 43 of this Prudential Standard) provide APRA with a Financial Information Declaration, signed by both of them, stating that for the last financial year, to the best of their knowledge and belief having made appropriate enquiries:
(a) the financial information that the insurer has lodged with APRA has been prepared in accordance with the Act, Regulations, prudential standards, the Collection of Data Act, accounting standards and other mandatory professional reporting requirements in Australia, to the extent that the accounting standards and professional reporting requirements do not contain any requirements contrary to the aforementioned legislative and prudential requirements;
(b) the information provided to the Appointed Auditor and Appointed Actuary for the purpose of enabling them to undertake their roles and responsibilities is accurate and complete, consistent with the accounting records of the insurer, and a true representation of the transactions for the year and the financial position of the insurer;[6] and
(c) the financial information lodged with APRA is accurate and complete, consistent with the accounting records of the insurer, and represents a true and fair view of the transactions for the year and the financial position of the insurer.