The Chairman of APRA, Wayne Byres, has made a Statement to the Senate Economics Legislation Committee about, amongst other things, APRA’s preparations to take over responsibilities for the prudential regulation of private health insurance.

Mr Byres said the transfer to APRA of responsibility for health insurance prudential regulation is scheduled for 1 July 2015 and APRA and the Private Health Insurance Administration Council (PHIAC) are on track to meet this date, subject to the passage of legislation.

Background: Exposure Draft Private Health Insurance (Prudential Supervision) Bill 2015

Mr Byres said:

“The approach we are taking is intended to minimise the disruption to industry and the risks to sound supervision. We have indicated that we intend to maintain the current regulatory framework and supervisory approach pretty much as is for at least the first year. In simple terms, the health insurance industry will wake up on 1 July and notice very little difference. The staff will be largely the same (and on day one the PHIAC supervision team will remain in place), the rules and standards will be substantively the same and the approach to supervision consistent with that experienced under PHIAC. In other words, private health insurers who are compliant with the current prudential framework will not need to take any steps at all in order to be compliant when the new prudential framework begins. As a result, there will be very little preparation for the change that will be required of the industry.

This outcome is being facilitated by the proposed legislation under which APRA will supervise the industry, and the intended approach for transferring PHIAC rules and standards to APRA standards. The draft bill sets out the prudential supervision framework, which – with some exceptions – will be the same as the existing prudential framework. The exceptions include aligning certain provisions to APRA’s existing supervision regime: this alignment will help us to remain efficient and cost-effective across all our operations. Some re-writing of existing prudential rules and standards will also be necessary to ensure they align with the bill, but again this is being done with the objective of ensuring that their substance does not materially change. Assuming the bill progresses as planned, we will be consulting on these changes in the next couple of months.”