Australia’s major group life insurers have received a caution from the Australian Prudential Regulation Authority (APRA) on the need for better risk management in the face of significant losses experienced in the sector.
Money Management has been told the major insurers were summoned to meetings with APRA last week during which the regulator is understood to have pointed to recent industry data which starkly reveals the degree to which bottom lines have been crimped and the manner in which insurers have had to lift their premiums.
It is understood APRA officials signaled their intention to lift the bar with respect to risk management within the group life/risk sector - something which is likely to place increased pressure on companies as they continue to pursue mandates from the major superannuation funds.
At least a part of the reason for the regulator’s concern is understood to be the manner in which the pursuit for mandates by business development managers led to margins being cut too thin.
Recent Plan for Life data has suggested the major group life/risk insurers have begun to adjust their positions, largely on the back of premium increases imposed on their superannuation fund clients.