๐€๐๐‘๐€ & ๐€๐’๐ˆ๐‚ ๐ซ๐ž๐ฅ๐ž๐š๐ฌ๐ž ๐ข๐ง๐Ÿ๐จ๐ซ๐ฆ๐š๐ญ๐ข๐จ๐ง ๐ฉ๐š๐œ๐ค๐š๐ ๐ž ๐จ๐ง ๐—™๐—”๐—ฅ

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  • ๐€๐๐‘๐€ & ๐€๐’๐ˆ๐‚ ๐ซ๐ž๐ฅ๐ž๐š๐ฌ๐ž ๐ข๐ง๐Ÿ๐จ๐ซ๐ฆ๐š๐ญ๐ข๐จ๐ง ๐ฉ๐š๐œ๐ค๐š๐ ๐ž ๐จ๐ง ๐—™๐—”๐—ฅ

A 5 week consultation period is seeking industry feedback on the proposed list of key functions for the insurance industry & the supporting key functions descriptions (by 19 April 2024)

๐˜ผ ๐™ฌ๐™ค๐™ง๐™™ ๐™ค๐™› ๐™˜๐™–๐™ช๐™ฉ๐™ž๐™ค๐™ฃ

Insurers should resist the temptation to create a FAR framework (& for the matter a CPS230 framework)

Insurers & underwriting agencies, TPAs, brokers etc are required under Prudential Standards (insurers) or AFSL general obligations (MGA/TPA/Brokers) to have a risk management framework/system. Often the level of sophistication is a factor of the risk maturity of the business.

FAR & CPS 230 presents an opportunity to refresh & enhance existing risk management arrangements not create complexity or duplication through seperate frameworks.

Accountability & culture components should already be included in existing risk & compliance frameworks.

๐™๐˜ผ๐™ – ๐™˜๐™ค๐™ง๐™š ๐™ค๐™—๐™ก๐™ž๐™œ๐™–๐™ฉ๐™ž๐™ค๐™ฃ๐™จ

The FAR introduces 4 core sets of obligations:

โ€ข accountability obligations;
โ€ข key personnel obligations;
โ€ข deferred remuneration obligations; &
โ€ข notification obligations.

๐˜ผ๐™˜๐™˜๐™ค๐™ช๐™ฃ๐™ฉ๐™–๐™—๐™ก๐™š ๐™ฅ๐™š๐™ง๐™จ๐™ค๐™ฃ๐™จ

Central to FAR is the concept of acountable persons.

An accountable person must conduct their responsibilities by:

– acting with honesty & integrity, & with due skill, care & diligence;
– dealing with the Regulators in an open, constructive & cooperative way;
– taking reasonable steps to prevent matters from arising that would adversely affect an insurer; &
– taking reasonable steps to prevent matters from arising that would result in a material contravention of financial services laws.

๐™„๐™ฃ๐™จ๐™ช๐™ง๐™–๐™ฃ๐™˜๐™š ๐™ ๐™š๐™ฎ ๐™›๐™ช๐™ฃ๐™˜๐™ฉ๐™ž๐™ค๐™ฃ๐™จ

An accountable person has responsibility for the Insurance Key Function if they have actual or effective senior executive responsibility for management or control of the whole of, or a significant or substantial part or aspect of, the applicable key function.

The draft proposes the following key functions for insurance:

You will readily observe that these can be easily aligned to existing risk categories & Financial Services Laws & Code obligations.

1. Capital management
2. Collections & enforcements
3. Conduct risk management
4. Data management
5. Financial & regulatory reporting
6. Hardship processes
7. Insurance risk management
8. Operational risk management
9. Product design & distribtion obligations
10. Product origination
11. Recovery & exit planning & resolution planning
12. Reinsurance management
13. Scam management
14. Technology management
15. Training & monitoring of relevant representatives & staff
16. Underwriting
17. Whistleblower policy & process

๐—”๐—ฆ๐—œ๐—– ๐—ฅ๐—š ๐Ÿฎ๐Ÿณ๐Ÿต

ASIC/APRA has issued an information paper – click here to view!

Have a chat with me if you need assistance