The Australian Prudential Regulation Authority used an industry address on insurer “readiness” after Tropical Cyclone Alfred to reiterate supervisory priorities for general, life and health insurers, focused on stronger governance, accountability and operational resilience. It highlighted the commencement of the Financial Accountability Regime (FAR) for insurers in March 2025 and the start of Prudential Standard CPS 230 Operational Risk Management in July 2025 as key measures aimed at ensuring insurers can meet critical obligations, including timely claims handling, during severe disruptions. Cyclone Alfred has already generated more than 75,000 insurance claims and insurers reportedly contacted around 250,000 policyholders in affected regions ahead of the event. For FAR, APRA and the Australian Securities and Investments Commission have been sharing observations from banking implementation, including gaps in assigning all relevant prescribed responsibilities to accountable persons and inadequate consideration of general responsibilities and key functions. CPS 230 is positioned to require clearer identification and management of operational risks, delivery of critical operations within tolerance levels throughout disruptions supported by credible business continuity plans, and tighter oversight of material service providers through formal agreements and robust monitoring; the regulator also warned that delegated underwriting can elevate risks and that accountability remains with the licensed insurer. The address also flagged affordability and availability pressures, citing average written premium increases to December 2024 of 8 per cent in domestic motor insurance and 16 per cent in home insurance, alongside calls for improved transparency on coverage, premium drivers, the impact of mitigation actions, and how insurers use consumer-provided information. APRA indicated it will elaborate further on delegated underwriting later in 2025, including sharing better practices, and plans to publish an insurance Climate Vulnerability Assessment later in 2025 assessing how insurance affordability may evolve to 2050 and identifying areas where adaptation needs could contribute to protection gaps.
Australian Prudential Regulation Authority 2025-03-21
Australian Prudential Regulation Authority sets insurer readiness expectations as FAR starts in March and CPS 230 begins in July
The Australian Prudential Regulation Authority highlighted supervisory priorities for insurers, focusing on governance, accountability, and operational resilience, during an industry address post-Tropical Cyclone Alfred. Key measures include the Financial Accountability Regime starting March 2025 and Prudential Standard CPS 230 Operational Risk Management in July 2025, with additional focus on affordability, availability pressures, and future guidance on delegated underwriting and climate vulnerability.