APRA proposes reforms to strengthen private health insurance
One of the proposals is to increase minimum capital requirements.
The Australian Prudential Regulation Authority (APRA) has commenced public consultation on measures designed to strengthen the capital framework for private health insurance.
The regulatory body has released proposed reforms aimed to increase the industry’s financial resilience as well as raise confidence that private health insurers can continue to pay all legitimate claims from policyholders even under severe stress.
The proposals increase minimum capital requirements, however APRA said that the industry is very well-capitalised and already holds capital significantly in excess of the new proposed regulatory minimums. APRA assessed that no insurer would need to increase premiums or raise equity to meet the higher minimum capital requirements.
“APRA’s capital standards play an essential role in ensuring private health insurers have the financial resources to meet their commitments to policyholders, even in the event of unexpected loss or crisis,” said deputy chair Helen Rowell.
Consultation on the new capital framework will close on 31 March 2022, with APRA expecting to release the final standards in the second half of the year.