In a letter to the chief executives of Australia’s general and life insurers, APRA said a number of insurers are “lagging behind industry better practice” when it comes to disclosing prudential information to the public.
While the regulator stressed it is important for the insurers to improve the quantity and quality of the information they disclose, APRA said it would “prefer” if the insurers took the lead without interference.
“On this basis, APRA is not proposing to impose any additional [requirements] on insurers at this time,” the regulator said.
“Instead, this letter draws attention to industry better practice and suggests practical and effective steps that each insurer can take to enhance the quality of its public disclosures for prudential purposes,” APRA wrote.
The prudential regulator highlighted that the “key benefits” of improving public disclosure for prudential purposes would be increased confidence in the “soundness” of insurers and the “promotion of stability” in the insurance industry.
“Public disclosures can give rise to better informed market participants (including investors, analysts, policyholders, other insurers and rating agencies),” the letter said.
“This provides for a more informed assessment of the soundness of each insurer, including assessment of each insurer’s capital adequacy with respect to its risks, governance and risk management practices.”
Along with the letter, APRA also provided a number of practical approaches that could assist insurers in making improved public disclosures.
These included making financial, directors’ and auditors’ reports freely available; providing qualitative disclosures that support and make financial disclosures more meaningful; improving corporate governance, remuneration and risk management disclosures; and considering the “appropriate mediums” for making public disclosures.
