Toby Fiennes spoke to the Australasian General Insurance Exchange Conference in Sydney about the regulations, which are designed to reduce the risk of an insurer failing and give the bank tools to manage insurers’ financial distress.
“The requirement to obtain a licence means that insurers must all meet certain minimum standards and this serves to reduce areas of high risk within the sector,” Fiennes said.
The regime requires insurers to meet solvency standards, which incorporate a catastrophe risk capital charge aimed at ensuring insurers can adequately respond to a 1-in-500 year event. Insurers are also required to be licensed by September 7.
Fiennes said the changes gave increased access to information on an insurer’s ability to pay claims to made disclosure of financial strength ratings mandatory.
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