APRA releases discussion paper on new rules for foreign insurers in Australia

APRA has issued a discussion paper on proposed refinements to the general insurance prudential framework which will affect not only direct offshore foreign insurers (DOFIs) (previously discussed here) that wish to become APRA-authorised but also all APRA-authorised general insurers.

The proposed refinements to the prudential framework are intended to apply from 1 July 2008.

The proposals recognise five different categories of insurer, based on their risk profiles, while maintaining adequate protection for policyholders.

The five categories of insurer are locally incorporated insurers, wholly owned subsidiaries of local or foreign insurers, foreign insurers operating as foreign branches, association captives, and sole parent captives.

The Government intends that offshore foreign reinsurers will not be required to be authorised in Australia.

APRA's discussion paper does not address the proposed exemptions from prudential regulation foreshadowed in the Government's announcement on foreign insurers. The Treasury is developing options for such exemptions and intends to issue a separate consultation paper on this topic.

APRA invites written submissions  by 11 September 2007.