APRA Proposes New Capital Framework for Private Health Insurance
The
In a discussion paper released today,
* aligning the PHI capital framework with the framework applying to life and general insurers, unless characteristics of the industry warrant a different approach;
* integrating changes stemming from the
* applying the capital framework to the insurer's entire business, rather than just the health benefits fund.
The changes are aimed at improving the sensitivity of prudential capital requirements to the risks private health insurers face, and improving the comparability of performance between insurers.
"With the PHI industry under pressure from the twin dilemmas of worsening affordability and adverse selection, a strong capital base is vital to keep insurers resilient and able to pay all legitimate claims from policyholders,"
"While it's possible the revised framework may increase some insurers' minimum capital requirements, we don't expect this to be significant. Importantly,
"A strengthened capital framework will boost insurer resilience, however it's not enough in isolation to help the industry overcome with the challenges of a shrinking and ageing membership base.
"While some insurers are evolving their business, innovating and looking at new models to provide services to their members, this is not the case with many.
The consultation will close on
The discussion paper is available on the
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