Financial Sector (Collection of Data) (reporting standard) determination No. 4 of 2024

EXPLANATORY STATEMENT

Prepared by the Australian Prudential Regulation Authority (APRA)

Financial Sector (Collection of Data) Act 2001, sections 13 and 15

Acts Interpretation Act 1901, section 33

Under subsection 13(1) of the Financial Sector (Collection of Data) Act 2001 (the Act), APRA has the power to determine reporting standards, in writing, with which financial sector entities must comply. Such standards relate to reporting financial or accounting data and other information regarding the business or activities of the entities. Subsection 33(3) of the Acts Interpretation Act 1901 provides that where an Act confers a power to issue an instrument the power shall, unless the contrary intention appears, be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to revoke any such instrument.

On 01 February 2024, APRA made the Financial Sector (Collection of Data) (revocation) determination No. 4 of 2024 which revokes Reporting Standard GRS 110.1_G Prescribed Capital Amount (Level 2 Insurance Group) made under Financial Sector (Collection of Data) (reporting standard) determination No. 2 of 2016 (the old reporting standard).

The instrument commences at the start of the day after it is registered on the Federal Register of Instruments.

1. Background

The old reporting standard contained requirements for the provision of information to APRA relating to a Level 2 insurance group’s prescribed capital amount.

In July 2017, the Australian Accounting Standards Board (AASB) adopted the International Financial Reporting Standard 17 into AASB 17 Insurance Contracts (AASB 17). AASB 17 commenced on 1 January 2023.

AASB 17 replaces three existing accounting standards used by insurers. These accounting standards govern the performance and liability valuation reporting of insurance contracts. APRA’s capital and reporting frameworks have close linkages with the accounting standards that determine accounting of insurance liabilities. As a result, APRA has made substantial updates to the capital and reporting frameworks for insurers to ensure compatibility with the new accounting standard since 2023. APRA considers that aligning its prudential and reporting framework with AASB 17 also reduces regulatory burden by limiting the need for insurers to maintain dual valuation, actuarial, accounting and reporting systems.

In May 2023, APRA determined new reporting standards as a part of APRA’s AASB 17 project which ensures that APRA’s reporting framework aligns with its prudential framework and Australian Accounting Standards. Insurers will be required to provide data to APRA in accordance with the standard, allowing APRA to supervise their compliance against the new capital requirements. One of the new reporting standards (Reporting Standard GRS 110.0.G Prescribed Capital Amount (the new reporting standard)) collects information which overlaps with the old reporting standard. As such, APRA has determined that collection of information under the old reporting standard is no longer required.

2. Purpose and operation of the Legislative Instrument

The purpose of the Legislative Instrument is to revoke the old reporting standard. The information collected under the old reporting standard is now collected under the new reporting standard. This will prevent duplication of reporting for general insurers.

Operation of the instrument

The first paragraph of the instrument identifies the source of the power that is being exercised by the delegate and is the operative paragraph that revokes the old reporting standard.

The second paragraph provides for the instrument to commence on the day after it is registered on the Federal Register of Legislative Instruments. This is the day that would apply under subsection 12(1) of the Legislation Act 2003 (Cth), if no commencement provision were made.

3. Documents incorporated by reference

Under paragraph 14(1)(a) of the Legislation Act 2003, the reporting standard revocation determination incorporates by reference as in force from time to time:

• Legislation Act 2003 (Cth).

All documents incorporated by reference in this reporting standard are available on the Federal Register of Legislation at www.legislation.gov.au.              

4. Consultation

The final round of consultation for the proposed cessation of the old reporting standard was completed on 27 September 2022, when APRA released finalised changes to the reporting framework for insurance in response to the introduction of AASB 17, including finalised reporting standards[1].

Submissions were received from reporting insurers, industry bodies, and regulatory technology providers, with no objections raised in response to the proposed revocation of the old reporting standard. APRA incorporated feedback received into the final versions of the reporting standards, including aligning with updates to the capital framework in response to industry feedback, adding clarification to reporting instructions and forms as requested by industry, and simplifying some reporting requirements in response to industry feedback.

APRA is satisfied the consultation was appropriate and reasonably practicable.

5. Regulation Impact Statement

A Regulation Impact Statement was prepared and lodged in connection with the wider AASB 17 project which contemplates the revocation of the old reporting standard.

6. Statement of compatibility prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

A Statement of compatibility prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 is provided at Attachment A to this Explanatory Statement.

ATTACHMENT A

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Financial Sector (Collection of Data) (reporting standard) determination No. 4 of 2024

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instrument listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (HRPS Act).

Overview of the Legislative Instrument

The purpose of the Legislative Instrument is to revoke the following instrument:

Reporting Standard GRS 110.1_G Prescribed Capital Amount (Level 2 Insurance Group) made under Financial Sector (Collection of Data) (reporting standard) determination No. 2 of 2016

Human rights implications

APRA has assessed the Legislative Instrument and is of the view that it does not engage any of the applicable rights or freedoms recognised or declared in the international instruments listed in section 3 of the HRPS Act. Accordingly, in APRA's assessment, the Legislative Instrument is compatible with human rights.

Conclusion

This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.

[1] New accounting standard – AASB 17 Insurance contracts | APRA