The Australian Prudential Regulation Authority (APRA) has applied an additional A$2m ($1.4m) capital requirement to Sovereign Insurance Australia (SIA), an MGA.
According to a statement from the regulator, this decision reflects SIA’s heightened risk profile due to weaknesses in managing non-financial risk and regulatory reporting.
The statement also noted that APRA identified serious deficiencies in SIA’s risk management framework and its management of operational risk. APRA’s concerns were amplified by SIA’s failure to comply with requirements of prudential standards, remediate issues in a timely and effective manner and lodge audited financial accounts with APRA.
“Insurance underpins financial stability for millions of Australians. APRA’s prudential framework and active supervision are critical to ensuring insurers meet their commitments,” said APRA Member Suzanne Smith.
“The additional capital requirement reflects the heightened prudential risks and should incentivise SIA to quickly and effectively remediate its risk management framework and management of operational risk.”
Ms Smith also said, “APRA will take further action if necessary to ensure policyholder interests are protected.”