Life Insurance (prudential standards) determination No.1 of 2008
EXPLANATORY STATEMENT
Prepared by the Australian Prudential Regulation Authority (APRA)
Life Insurance Act 1995, section 230A
Under subsection 230A(5) of the Life Insurance Act 1995 (Life Act) APRA may, in writing, revoke a prudential standard made in relation to prudential matters to be complied with by all life insurance companies (including friendly societies). Under subsection 230A(1) APRA may, in writing, determine a prudential standard made in relation to prudential matters to be complied with by all life insurance companies (including friendly societies).
- Background
The Financial Sector Legislation Amendment (Review of Prudential Decisions) Act 2008 (RPD Act) amended the Life Act. Amongst other things, the RPD Act introduced a court-based process for disqualifying an individual from certain roles in a life company; it removed the necessity for ministerial consent for some decisions; and it streamlined some of APRA’s directions powers where appropriate.
Prudential Standard LPS 310 Audit and Actuarial Requirements (LPS 310) applies to all life companies (including friendly societies). It is designed to ensure that life companies are subject to minimum standards of independent oversight. It sets out a number of requirements relating to audit and actuarial arrangements, which provide an independent perspective of the activities of a life company.
2. Purpose of the Instrument
In light of the recent amendments to the Life Act, outlined above, APRA is revoking and re-making LPS 310 with a minor amendment. This is to ensure that LPS 310 continues to be consistent with the Life Act.
3. Operation of the Instrument
The effect of the instrument is to amend paragraph 4(c) of LPS 310. The reference to section 86 of the Life Act (which was repealed by the RPD Act), has been updated to section 245A. Also ‘ineligible to hold an appointment as an auditor’ has been updated to ‘disqualified from being an auditor’ to reflect the RPD Act.
4. Consultation
APRA considered that public consultation was not necessary for this amendment to LPS 310. The amendment is minor and consequential to amendments to the Life Act. The Treasury conducted public consultation in relation to these amendments to the Life Act.