APRA Explores Alternative Reinsurance Solutions Amid Market Challenges

2

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

Driven by recent fluctuations in market conditions, APRA member Suzanne Smith highlights the pursuit of innovative reinsurance options, including catastrophe bonds, to bolster the capabilities of general insurers. Traditionally reliant on conventional reinsurance channels, the industry is now looking to adapt to emerging pressures.

Smith acknowledges the multitude of recent challenges impacting the global reinsurance landscape. "In recent years, the global reinsurance market has been challenged by a range of factors including the increased impact of severe weather events and rising geopolitical instability," she remarked in a communication directed at general insurers and reinsurers.

These factors have led to a tightening reinsurance market, both domestically and globally, with repercussions seen in higher retention levels and escalating reinsurance expenses. These dynamics add layers of complexity to availability and affordability of insurance products.

To navigate these obstacles, APRA is weighing potential modifications to its general insurance reinsurance framework. Smith's letter lays out these potential adjustments, emphasizing the necessity for industry input before proceeding further.

Among the areas under review are APRA’s capital requirements connected to aspects such as all perils coverage and reinstatement premium stipulations. "While the potential adjustments detailed ... represent an easing of the current requirements, APRA will continue to expect robust reinsurance management practices," explained Smith.

This current consultancy period follows APRA's prior announcement in August of the preceding year, during which they expressed intentions to evaluate prudential requirements to ensure their relevance. Feedback from the industry up to that point had indicated that certain elements of APRA's regulatory framework hindered access to diverse reinsurance strategies.

As APRA solicits vital input during this stage, the role of alternative reinsurance solutions becomes increasingly significant for sustaining the industry's resilience against both regional and global challenges. Industry participants have until February 17 to submit their feedback.

For further insights into the review and to access the consultation letter, APRA encourages stakeholders to participate actively in this evolving dialogue, which promises to redefine the contours of reinsurance practices in Australia.

Published:Monday, 11th Nov 2024
Source: Paige Estritori

Please Note: If this information affects you, seek advice from a licensed professional.

Share this news item:

Insurance News

Clear

Suncorp Reaches Maximum Reinsurance Retention Following Severe Storms in Queensland and NSW

11 Dec 2025: Paige Estritori

Recent supercell thunderstorms in South East Queensland and northern New South Wales have led to a surge in insurance claims, prompting Suncorp to reach its maximum reinsurance retention of $350 million. The insurer has reported over 10,000 claims related to these events, with approximately half pertaining to home damages and the other half to motor vehicles. - read more

NTARC Report Identifies Inattention and Speed as Primary Factors in Major Truck Crashes

11 Dec 2025: Paige Estritori

The National Truck Accident Research Centre (NTARC) has released its latest Major Incident Investigation Report, highlighting inattention, distraction, and inappropriate speed as the most frequent human factors behind major truck crashes in Australia. While there has been a modest reduction in these incidents compared to previous years, they continue to pose significant risks to road safety. - read more

Rising Mental Health Claims Reshape Australia's Insurance Landscape

10 Dec 2025: Paige Estritori

The Australian insurance industry is witnessing a significant shift as mental health conditions have become the leading cause of total and permanent disability (TPD) claims. Recent data from the Council of Australian Life Insurers (CALI) indicates that mental health issues now account for nearly one-third of all TPD claims, marking a substantial change in the industry's claim patterns. - read more

Australian General Insurers Achieve $6 Billion Profit Amid Fewer Natural Disasters

10 Dec 2025: Paige Estritori

In a remarkable turnaround, Australian general insurers have reported a combined profit of $6.1 billion over the past year. This substantial increase is attributed to a period of relative calm in natural catastrophes and robust investment returns. - read more

Australian Life Insurers Under Review for Mental Health Exclusion Practices

10 Dec 2025: Paige Estritori

Recent findings have revealed that certain Australian life insurers continue to implement blanket exclusions for mental health conditions, a practice that contravenes the industry's code of practice. This has raised significant concerns about the fairness and legality of such exclusions. - read more

Click for more Insurance News