APRA said the risk governance self-assessments, undertaken by 35 other APRA-regulated entities, confirmed that many of the issues identified by its prudential inquiry into Commonwealth Bank of Australia (CBA) also existed in other institutions, including the need to strengthen non-financial risk management, ensure accountabilities are clear, cascaded and enforced, and to enhance risk culture.
The prudential regulator said the extra $250 million capital requirement will remain in place until Allianz completes remediation work underway to strengthen risk management and closes gaps identified in its self-assessment.
“Last financial year, APRA-regulated general insurers paid out $27.5 billion to their policyholders,” said Geoff Summerhayes, APRA executive board member. “With Australians relying on these policies to financially protect them when things go wrong, it’s essential that insurers have in place appropriate internal processes to honour those commitments. By imposing this additional capital requirement, APRA is providing a financial incentive for Allianz to quickly and effectively implement its planned remediation work. We also want to send a message to the broader insurance and superannuation industries that APRA expects the same high standards of risk management, including for non-financial risks, as we do for the banks.”
