Health Insurance (prudential standard) determination No 3 of 2018
EXPLANATORY STATEMENT
Prepared by the Australian Prudential Regulation Authority (APRA)
Private Health Insurance (Prudential Supervision) Act 2015, section 92
APRA has the power to revoke standards (prudential standards), in writing, in relation to prudential matters to be complied with by all registered private health insurers under subsection 92(5) of the Private Health Insurance (Prudential Supervision) Act 2015 (the PHIPS Act).
On 14 September 2018, APRA revoked the Health Insurance (prudential standard) determination No. 6 of 2015 under subsection 92(5) of the PHIPs Act, (the instrument).
The instrument commences on the day following registration.
- Background
APRA’s mandate is to ensure the safety and soundness of prudentially regulated financial institutions so that they can meet their financial promises to depositors, policyholders and fund members within a stable, efficient and competitive financial system. APRA carries out this mandate through a multi-layered prudential framework that encompasses licensing and supervision of institutions.
APRA has undertaken a review of the prudential framework for private health insurers to ensure it is fit for purpose and aligns with APRA’s mandate as outlined in the August 2016 letter to industry: Private health insurance: prudential policy outlook.
Prudential Standard HPS 350 Disclosure to APRA (HPS 350) was introduced in 2010 by the previous regulator of private health insurance, the Private Health Insurance Administration Council. It was designed to capture information about unusual events with the potential to materially impact on the private health insurer’s operations. HPS 350 was transitioned to APRA in 2015 without amendment as part of APRA’s commitment to minimising industry disruption during the transfer period.
APRA is now responding to stakeholder feedback that under the current framework the requirements of HPS 350 have led to duplicate and in some instances redundant reporting.
2. Purpose of the instrument
The purpose of the instrument is to revoke HPS 350, as it contains outdated reporting requirements. Removing these obligations for private health insurers will reduce the regulatory compliance burden without affecting prudential safety.
3. Operation of the instrument
The instrument will revoke the prudential standard on the day following registration.
4. Consultation
In February 2018, APRA released for public consultation a discussion paper, Governance, fit and proper and audit requirements for private health insurers which included a proposal to revoke the disclosure standard.
APRA received nine written submissions in response to the discussion paper, and all were supportive of the proposal to revoke HPS 350.
5. Regulation Impact Statement
The Office of Best Practice Regulation advised that a Regulation Impact Statement was not required for this determination.
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
Health Insurance (prudential standard) determination No. 3 of 2018
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 Legislative Instrument revokes Prudential Standard HPS 350 Disclosure to APRA made under Health Insurance (prudential standard) determination No. 6 of 2015.
The purpose of this Legislative Instrument is to reduce the regulatory burden on private health insurers.
Human rights implications
APRA has assessed the instrument against the international instruments listed in section 3 of the HRPS Act and determined that it does not engage any of the applicable rights or freedoms.
Conclusion
This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.