๐—”๐—ฟ๐—ฒ ๐˜†๐—ผ๐˜‚ ๐—ฎ๐—ป ๐—จ๐—ป๐—ฑ๐—ฒ๐—ฟ๐˜„๐—ฟ๐—ถ๐˜๐—ถ๐—ป๐—ด ๐—”๐—ด๐—ฒ๐—ป๐—ฐ๐˜†, ๐—–๐—น๐—ฎ๐—ถ๐—บ ๐—ฆ๐—ฒ๐—ฟ๐˜ƒ๐—ถ๐—ฐ๐—ฒ ๐—ฆ๐˜‚๐—ฝ๐—ฝ๐—น๐—ถ๐—ฒ๐—ฟ ๐—ผ๐—ฟ ๐—œ๐—ป๐˜€๐˜‚๐—ฟ๐—ฎ๐—ป๐—ฐ๐—ฒ ๐—•๐—ฟ๐—ผ๐—ธ๐—ฒ๐—ฟ? ๐—”๐—ฟ๐—ฒ ๐˜†๐—ผ๐˜‚ ๐—ฝ๐—ฟ๐—ฒ๐—ฝ๐—ฎ๐—ฟ๐—ฒ๐—ฑ ๐—ณ๐—ผ๐—ฟ ๐—–๐—ฃ๐—ฆ ๐Ÿฎ๐Ÿฏ๐Ÿฌ?

  • Compliance Advocacy Solutions
  • Bills
  • Family
  • News
  • ๐—”๐—ฟ๐—ฒ ๐˜†๐—ผ๐˜‚ ๐—ฎ๐—ป ๐—จ๐—ป๐—ฑ๐—ฒ๐—ฟ๐˜„๐—ฟ๐—ถ๐˜๐—ถ๐—ป๐—ด ๐—”๐—ด๐—ฒ๐—ป๐—ฐ๐˜†, ๐—–๐—น๐—ฎ๐—ถ๐—บ ๐—ฆ๐—ฒ๐—ฟ๐˜ƒ๐—ถ๐—ฐ๐—ฒ ๐—ฆ๐˜‚๐—ฝ๐—ฝ๐—น๐—ถ๐—ฒ๐—ฟ ๐—ผ๐—ฟ ๐—œ๐—ป๐˜€๐˜‚๐—ฟ๐—ฎ๐—ป๐—ฐ๐—ฒ ๐—•๐—ฟ๐—ผ๐—ธ๐—ฒ๐—ฟ? ๐—”๐—ฟ๐—ฒ ๐˜†๐—ผ๐˜‚ ๐—ฝ๐—ฟ๐—ฒ๐—ฝ๐—ฎ๐—ฟ๐—ฒ๐—ฑ ๐—ณ๐—ผ๐—ฟ ๐—–๐—ฃ๐—ฆ ๐Ÿฎ๐Ÿฏ๐Ÿฌ?

APRA Prudential Standard CPS 230 ‘Operational Risk Management’ comes into force July 2025.

CPS 230 applies to APRA-regulated insurers (including both local insurers & Category C insurers) however there are indirect or downstream impacts on Underwriting Agencies, Claim Managers (Service Suppliers) & Insurance Brokers.

These impacts arise in respect of insurers’ critical operations & material service providers.

๐™˜๐™ง๐™ž๐™ฉ๐™ž๐™˜๐™–๐™ก ๐™ค๐™ฅ๐™š๐™ง๐™–๐™ฉ๐™ž๐™ค๐™ฃ๐™จ

An APRA-regulated entity must maintain its critical operations within tolerance levels through severe disruptions & manage the risks associated with the use of service providers (para 12 CPS 230).

For an insurer, claims processing is a critical operation unless the insurer can justify otherwise.

๐™ˆ๐™–๐™ฉ๐™š๐™ง๐™ž๐™–๐™ก ๐™จ๐™š๐™ง๐™ซ๐™ž๐™˜๐™š ๐™ฅ๐™ง๐™ค๐™ซ๐™ž๐™™๐™š๐™ง๐™จ

An APRA-regulated entity must, at a minimum, classify a provider of the following services as a material service provider, unless it can justify otherwise: for an insurer (general, life, private health): underwriting, claims management, insurance brokerage & reinsurance (p50)

๐˜”๐˜ข๐˜ฏ๐˜ข๐˜จ๐˜ฆ๐˜ฎ๐˜ฆ๐˜ฏ๐˜ต ๐˜ฐ๐˜ง ๐˜ด๐˜ฆ๐˜ณ๐˜ท๐˜ช๐˜ค๐˜ฆ ๐˜ฑ๐˜ณ๐˜ฐ๐˜ท๐˜ช๐˜ฅ๐˜ฆ๐˜ณ ๐˜ข๐˜ณ๐˜ณ๐˜ข๐˜ฏ๐˜จ๐˜ฆ๐˜ฎ๐˜ฆ๐˜ฏ๐˜ต๐˜ด

An APRA-regulated insurer must:

  • Maintain a comprehensive service provider management policy (p47);
  • Identify & maintain a register of its material service providers & manage the material risks associated with using these providers (p49) & submit the register to APRA on an annual basis;
  • Before entering into or modifying a material arrangement undertake due diligence assessing the financial & non-financial risks (p53)
  • Maintain a formal legally binding agreement covering the matters listed in p54 (a) – (g);
  • Monitor the arrangement (p58);
  • Meet the APRA notification requirements (p59); &
  • Have the arrangements reviewed by its internal audit function (p60).

๐™Ž๐™ค ๐™ฌ๐™๐™–๐™ฉ ๐™™๐™ค๐™š๐™จ ๐™ฉ๐™๐™ž๐™จ ๐™ข๐™š๐™–๐™ฃ ๐™›๐™ค๐™ง ๐™ข๐™–๐™ฉ๐™š๐™ง๐™ž๐™–๐™ก ๐™จ๐™š๐™ง๐™ซ๐™ž๐™˜๐™š ๐™ฅ๐™ง๐™ค๐™ซ๐™ž๐™™๐™š๐™ง๐™จ?

Material service providers who are well prepared for the impacts of CPS 230 will achieve a competitive advantage in their partnering with insurers.

Providers of material services must:

  • Incorporate the requirements of CPS 230 into their risk & compliance arrangements including referencing APRA’s Prudential Practice Guide (CPG 230);
  • Engage early with insurer(s) to understand the insurer(s) project plan in respect of timeframes & any unique requirements they have; &
  • Arrange for a compliance review in early 2024 (due diligence) to fully understand the impact of the proposed changes to ensure a seamless transition to the new arrangements.

Do not hesitate to contact me to assist in being prepared for the impacts of CPS 230 on your business.