Life Insurance (Prudential Rules) Determination
Nos. A1, A2
EXPLANATORY STATEMENT
Prepared by the Australian Prudential Regulation Authority (APRA)
Life Insurance Act 1995, section 252
Under subsection 252(4) of the Life Insurance Act 1995 (Life Act) APRA may, in writing, vary a prudential rule made in relation to prudential matters to be complied with by all life insurance companies (including friendly societies).
- Background
In March 2010, APRA revoked LPS 310 and remade the standard as two separate prudential standards LPS 310 Audit and Related Matters (new LPS 310) and LPS 320 Actuarial and Related Matters (LPS 320). Due to the restructuring of these standards, consequential amendments are needed to certain prudential rules. Changes have been made to update cross-references.
Life Insurance (Prudential Rules) Determination Nos. A1, A2 of 2010 vary certain prudential rules applying to life insurance companies regulated by APRA. These prudential rules are:
- Prudential Rules No. 40 Approval of Benefit Fund Rules; and
- Prudential Rules No. 41 Approval of Amendment of Approved Benefit Fund Rules.
The key changes involve:
- amending cross-references to LPS 310 to reflect the new title of the standard;
- amending cross-references to actuarial-related content formerly contained in LPS 310 and now included in LPS 320.
APRA has determined that Life Insurance (Prudential Rules) Determination Nos. A1, A2 of 2010 be effective from the date of their registration on the Federal Register of Legislative Instruments.
2. Purpose and operation of the Instrument
The purpose of each instrument is to vary the existing prudential rules applying to life insurers. Under the Life Act, APRA is unable to revoke and replace affected prudential rules. For that reason, APRA has varied affected prudential rules rather than replaced them.
3. Consultation
APRA undertook public consultation on its proposed Prudential Standard LPS 310 Audit and Related Matters as part of its broader consultation on the ‘Enhanced Supervision of Life Companies’ package released on 7 May 2009.
The consequential changes were foreshadowed as part of this consultation. As the changes were minor APRA did not undertake consultation on the proposed changes.
4. Regulation Impact Statement
A Regulation Impact Statement for the consequential changes described in this explanatory statement was not required.