Insurance (prudential standard) determination No. 1 of 2025
EXPLANATORY STATEMENT
Prepared by the Australian Prudential Regulation Authority (APRA)
Insurance Act 1973, section 32
Under subsection 32(1) of the Insurance Act 1973 (the Act), APRA has the power to determine standards (prudential standards), in writing, in relation to prudential matters to be complied with by all general insurers, authorised non-operating holding companies (authorised NOHCs) and subsidiaries of general insurers and authorised NOHCs. Under subsection 32(4) of the Act, APRA may, in writing, vary or revoke a prudential standard.
On 15 November 2025, APRA made Insurance (prudential standard) determination No. 1 of 2025 (the instrument), which revokes Prudential Standard GPS 410 Transfer and Amalgamation of Insurance Business for General Insurers made under Insurance (prudential standard) determination No. 1 of 2018 and determines a new Prudential Standard GPS 410 Transfer and Amalgamation of Insurance Business for General Insurers (GPS 410).
The instrument commences on 1 January 2026.
1. 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. In the case of the general insurance industry, APRA is empowered under the Act to issue legally binding prudential standards that set out specific prudential requirements with which general insurers must comply.
GPS 410 is a legally binding prudential standard that governs the transfer and amalgamation of insurance business by general insurers. It requires general insurers to notify affected policyholders and other interested parties, obtain APRA approval, and follow specific procedures when applying to the Court. These requirements are designed to promote transparency by ensuring affected parties are informed of any transfer or amalgamation, receive accurate details, and have the opportunity to access further information if desired.
2. Purpose and operation of the instrument
The purpose of the instrument is to revoke the existing GPS 410 and replace it with a new version of GPS 410.
The new version makes minor amendments including:
- removing the requirement that the public inspection of scheme documents relating to transfers of business be at a physical location, reflecting the view that physical access of these documents is no longer necessary given widespread digital alternatives; and
- updating disclosure requirements to align with contemporary Court practice by requiring scheme documents (the scheme, actuarial reports and the scheme summary) be accessible on each insurer’s website.
Details of the new prudential standard
See Attachment A.
Documents incorporated by reference
Under subsection 14(1)(a) of the Legislation Act 2003, the standard incorporates by reference as in force from time to time:
- Acts of Parliament and associated delegated laws; and
- Prudential Standards determined by APRA under subsection 32(1) of the Act.
These documents may be freely obtained on the Federal Register of Legislation at www.legislation.gov.au.
Exercise of discretion by APRA
Under subsection 32(3D) of the Act, a prudential standard may provide for APRA to exercise powers and discretions under the standard, including (but not limited to) discretions to approve, impose, adjust or exclude specific prudential requirements in relation to a particular general insurer, authorised NOHC or subsidiary of a general insurer or authorised NOHC, or in relation to specified general insurers, authorised NOHCs or subsidiaries of general insurers or authorised NOHCs.
APRA’s prudential standards include powers that may be exercised by APRA that involve an element of discretion and that may affect the interests of the entities to which the prudential standards apply. These powers include a power to adjust or exclude a provision of the prudential standard.
The need to apply discretion is driven by entity-specific issues and circumstances that are not adequately addressed by the generally applicable provisions of the prudential standards. For example, adjustment or exclusion of a provision may be necessary to obtain a better prudential outcome than would be the case if the prudential requirement were applied unaltered to a particular regulated entity.
When exercising its discretion, APRA considers a wide range of factors, including the considerations set out in the Act and the Australian Prudential Regulation Authority Act 1998.
The exercise of APRA's powers is governed by a robust decision-making framework which is documented in APRA's internal policies. This framework supports APRA in fulfilling its mandate by limiting decision making to those senior APRA officers with the appropriate experience and skill to exercise prudent judgement. The framework also requires decision makers to seek advice from internal technical experts.
The power is also exercised following discussion with the relevant general insurer about its appropriateness and the impact it may have on the entity.
Review of decisions
Decisions made by APRA exercising powers in prudential standards are not themselves subject to merits review. This is because these decisions are preliminary decisions that may facilitate or lead to substantive decisions which are subject to merits review.
A breach of a prudential standard is a breach of the Act, as section 35 of the Act provides that a general insurer, authorised NOHC or a subsidiary of a general insurer or authorised NOHC must comply with applicable prudential standards. However, there are no penalties prescribed for such breaches. Instead, a general insurer or authorised NOHC’s breach of a provision in the Act is a ground for APRA to make further, substantive decisions under the Act in relation to the general insurer or authorised NOHC. Those decisions include:
- to revoke an authority to carry on insurance business (section 15 of the Act);
- revoke a NOHC authorisation (see section 21 of the Act); and
- to issue a direction to the general insurer or authorised NOHC, including a direction to comply with the whole or part of a prudential standard (section 104 of the Act).
It is only at this stage that the general insurer or an authorised NOHC is exposed to a penalty: loss of its authority under section 15 or 50 penalty units if it breaches the direction (section 108 of the Act). In nearly all cases[1] the decision is preceded by a full consultation with the general insurer to raise any concerns it may have in relation to the decision.
A decision of APRA to impose a direction is subject to merits review under section 104 of the Act, which is appropriately available at the point where a general insurer could be exposed to a penalty.
A decision of APRA to revoke an authority under the Act is subject to merits review, unless APRA has determined that access to natural justice and merits review is contrary to the national interest (subsection 15(4) of the Act).
3. Consultation
On 25 August 2025, APRA consulted[2] on a set of minor updates to the prudential and reporting framework, including amendments to GPS 410. As part of the consultation, it was proposed that the requirement for the public inspection of scheme documents relating to transfers of business to be at a physical location be removed, as this requirement is no longer fit for purpose given the scheme documents can now be easily accessed via the internet or sent to a member of the public. This requirement was also onerous on the general insurer. This consultation was accompanied by the release of draft prudential and reporting standards for industry feedback.
APRA received one submission regarding GPS 410 from an insurer during the consultation. This submission was supportive of the proposed change regarding GPS 410. As the submission was supportive of the proposed change, no additional action was undertaken.
APRA is satisfied the consultation was appropriate and reasonably practicable.
4. Impact Analysis (IA)
The Office of Impact Analysis has confirmed that a Regulation Impact Analysis is not required.
5. 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 B to this Explanatory Statement.
ATTACHMENT A
Details of the new prudential standard
Authority and application
Under section 32(1) of the Act, APRA may determine prudential standards to be complied with by (among others) all, or specified classes of, general insurers, authorised NOHCs and subsidiaries of general insurers and authorised NOHCs.
Paragraph 1 is the machinery provision relating to the legal authority under which the instrument is made, the general insurers that are required to comply with the standard.
Paragraph 2 states that a transfer or amalgamation of insurance business can occur only under a scheme confirmed by the Federal Court.
Paragraph 3 states that any transfer of amalgamation of insurance business will be subject to the Insurance Acquisitions and Takeovers Act 1991.
Requirements for transfers and amalgamations of insurance business
Documents to be provided to APRA prior to an application being made to the Court
Paragraphs 4 to 6 set out the requirements for insurers to provide APRA with a copy of the scheme and any actuarial reports before applying to the Court for confirmation of a scheme.
Notification requirements
Paragraphs 7 to 11 set out that insurers must obtain APRA’s approval of the scheme summary before publishing a notice of intention, which must be publicly accessible, prominently displayed, and accompanied by the scheme and related actuarial reports.
Approved summary
Paragraphs 12 to 15 outline that an application to the Court for confirmation of a scheme cannot be made unless insurers provide every affected policyholder with an APRA-approved scheme summary before or at the time of its publication. This summary should clearly outline the proposed transfer, its implications, any required actions, and the policyholder’s right to attend the Court if they believe the scheme may have a detrimental impact on their interests.
Publication of scheme
Paragraph 16 requires that the scheme and supporting actuarial reports be prominently displayed on the website of each insurer bound by the scheme. These documents must remain accessible from the time the notice of intention is published until the date of the scheme’s confirmation hearing.
Application for confirmation of scheme
Paragraph 17 provides that an application to the Court for confirmation of a scheme may only be made: (a) once the scheme documents have been published on the insurer’s website for at least 15 days and, (b) unless waived by the Court, the approved summary has been given to every affected policyholder for at least 15 days – whichever occurs later.
Documents to be provided to APRA after the Court has approved a scheme
Paragraphs 18 to 20 outline the requirements for insurers to provide APRA with key documentation following Court approval of a transfer or amalgamation of their insurance business.
Attachment – Transfer and Amalgamation of Insurance Business
The Attachment outlines the procedural steps, documentation requirements, and regulatory references for insurers undertaking a transfer or amalgamation of insurance business under Part III, Division 3A of the Act.
ATTACHMENT B
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Insurance (prudential standard) determination No. 1 of 2025
This legislative instrument is compatible with the human rights and freedoms recognised or declared in the international instruments 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 Prudential Standard GPS 410 Transfer and Amalgamation of Insurance Business for General Insurers and replace it with a new version of GPS 410.
GPS 410 sets out the obligations of general insurers to notify policyholders and interested parties and the procedural requirements when making an application to the Court for any transfers or amalgamations of their insurance business. General insurers are bodies corporate that have been granted the authority, under the Insurance Act 1973, to carry on insurance business in Australia.
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 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] Subsection 15(4) of the Act specifically provides that APRA does not need to consult where APRA is satisfied that doing so could result in a delay in revocation that would be contrary to the national interest.
[2] See: www.apra.gov.au/prudential-and-reporting-framework-minor-updates.