Insurance (prudential standard) determination No. 1 of 2025

Administered by Department of the Treasury

Legislation au F2025L01428 In force Legislative Instrument

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 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.

Overview

The Insurance (prudential standard) determination No. 1 of 2025 was enacted by the Australian Prudential Regulation Authority (APRA) under the Insurance Act 1973. This instrument addresses the need to update the existing Prudential Standard GPS 410 Transfer and Amalgamation of Insurance Business for General Insurers, replacing it with a revised version to accommodate contemporary practices. The primary objective of this determination is to enhance the efficiency and effectiveness of the prudential standards governing the transfer and amalgamation of insurance business by general insurers. It seeks to modernise the regulatory framework by, for example, removing the requirement for physical inspection of scheme documents and updating disclosure requirements to align with current Court practices, including the necessity for such documents to be accessible online. APRA, the regulatory body responsible for ensuring the prudential soundness of the insurance industry, exercises its discretion to adjust or exclude specific provisions of prudential standards where necessary to achieve better prudential outcomes. These standards, while legally binding, are designed to be flexible enough to address unique circumstances of individual insurers, thereby promoting a stable and competitive insurance market. The new version of GPS 410 aims to strike a balance between regulatory requirements and operational flexibility, ensuring that affected policyholders and other stakeholders are adequately informed and protected during the transfer and amalgamation processes.

Scope and Application

The Insurance (prudential standard) determination No. 1 of 2025 applies to all general insurers, authorised non-operating holding companies (authorised NOHCs), and subsidiaries of general insurers and authorised NOHCs, as mandated by the Insurance Act 1973. The determination focuses on prudential standards necessary for the transfer and amalgamation of insurance business, ensuring that these entities comply with specific regulatory requirements to protect policyholders and maintain the stability of the financial system. Geographically, this standard applies across the Commonwealth of Australia, with APRA, as the regulator, ensuring adherence to these standards throughout the nation. The determination revokes the existing Prudential Standard GPS 410 and introduces a new version, including amendments to reflect digital advancements and contemporary court practices, such as the accessibility of scheme documents online rather than requiring physical inspection. Notably, the instrument does not include specific exclusions, exemptions, or thresholds but allows for APRA's discretionary powers to adjust or exclude certain provisions based on entity-specific circumstances. The instrument's commencement date is set for 1 January 2026, and it incorporates by reference other relevant Acts and prudential standards, which can be accessed through the Federal Register of Legislation.

Key Provisions

The main sections of the Insurance (prudential standard) determination No. 1 of 2025 are the machinery provision under section 32(1) of the Insurance Act 1973, which allows the Australian Prudential Regulation Authority (APRA) to determine prudential standards for general insurers, authorised non-operating holding companies (authorised NOHCs), and their subsidiaries. This determination revokes the existing Prudential Standard GPS 410 and replaces it with a new version, GPS 410, which addresses the transfer and amalgamation of insurance business by general insurers. The new standard removes the requirement for public inspection of scheme documents to be conducted at a physical location and updates disclosure requirements to align with contemporary Court practice. Under the new GPS 410, general insurers are required to notify affected policyholders and other interested parties of any proposed transfers or amalgamations. They must obtain APRA approval for the scheme summary before publishing a notice of intention, which must be prominently displayed and publicly accessible. The scheme summary must be provided to every affected policyholder before or at the time of publication. The scheme and supporting actuarial reports must be accessible on the insurer’s website from the time the notice of intention is published until the date of the scheme’s confirmation hearing. An application to the Court for confirmation of a scheme can only be made once the scheme documents have been published on the insurer’s website for at least 15 days and the approved summary has been provided to every affected policyholder for at least 15 days, unless waived by the Court. APRA has the discretion to exercise certain powers under the new GPS 410, including the power to adjust or exclude specific prudential requirements in relation to a particular general insurer, authorised NOHC, or subsidiary of a general insurer or authorised NOHC. This discretion is exercised based on entity-specific issues and circumstances that are not adequately addressed by the generally applicable provisions of the prudential standards. The exercise of these powers is governed by a robust decision-making framework documented in APRA’s internal policies. Decisions made by APRA exercising powers in prudential standards are not themselves subject to merits review, as they are preliminary decisions that may facilitate or lead to substantive decisions, which are subject to merits review. A breach of a prudential standard under GPS 410 is a breach of the Insurance Act 1973. There are no penalties prescribed for such breaches, but a general insurer or authorised NOHC’s breach of a provision in the Act is a ground for APRA to make further, substantive decisions in relation to the entity. These decisions include revoking an authority to carry on insurance business, revoking a NOHC authorisation, or issuing a direction to the general insurer or authorised NOHC, including a direction to comply with the whole or part of a prudential standard. It is at this stage that the general insurer or an authorised NOHC is exposed to a penalty: loss of its authority or a fine of up to 50 penalty units if it breaches the direction. A decision of APRA to impose a direction is subject to merits review, while a decision to revoke an authority is subject to merits review unless APRA determines that access to natural justice and merits review is contrary to the national interest.

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