Selection and monitoring of insurersSelection and monitoring of insurers

Selection and monitoring of insurers

23. An RSE licensee must:

(a) develop and implement a selection process for choosing an insurer that includes, at a minimum, consideration of the prospective insurer’s terms of cover and exclusions, claims philosophy, the reasonableness of the premiums to be charged and terms of any delegation to any other person of functions associated with making available insured benefits;

(b) undertake a due diligence review of the selected insurer; and

(c) be able to demonstrate to APRA the appropriateness of the selection process and due diligence review and how it is applied.

24. An RSE licensee must be able to satisfy itself, and demonstrate to APRA, that the engagement of an insurer is conducted at arm’s length and is in the best financial interests of beneficiaries.

25. Where an insurer that is a connected entity of an RSE licensee is party, or will be party, to an insurance arrangement with the RSE licensee under which the RSE licensee makes, or will make, insured benefits available to beneficiaries, the RSE licensee must obtain an

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11 Refer to section 52(2)(c) of the SIS Act. Note that only insurance arrangements entered into from the effective date of this Prudential Standard are required to include a right for the RSE licensee to terminate the insurance arrangement, or the relevant part of the insurance arrangement, if the RSE licensee is not satisfied that the arrangement is in the best financial interests of the beneficiaries.