The Treasury has today released an Exposure Draft that will establish APRA as the prudential regulator of the private health insurance industry. This is part of the Smaller Government – additional reductions in the number of Australian Government bodies initiative announced as part of the 2014-15 Budget. The Private Health Insurance Administration Council (PHIAC) will cease as a separate body and its prudential supervisory functions will be transferred to the Australian Prudential Regulation Authority (APRA). The transfer of PHIAC’s prudential supervisory functions will be given effect by the Exposure Draft Private Health Insurance (Prudential Supervision) Bill 2015 (Exposure Draft Bill) which will represent a new Act for the regulation of private health insurers, administered by APRA. The main changes are:
- the registration of private health insurers and the prevention of entities not registered from carrying on a health related business
- requirement for private health insurers to have health benefits funds and obligations relating to the operation of such funds
- restructure, merger, acquisition and termination of health benefits funds
- appointment of an external manager of a health benefit fund and the powers and duties of external managers and terminating managers
- duties and liabilities of directors
- establishment of prudential standards and directions by APRA and the requirements for health benefits funds to comply with such standards and directions
- obligations of private health insurers such as the appointment of actuaries and reporting and notification requirements
- APRA’s ability to supervise compliance by private health insurers with their obligations and APRA’s enforcement powers
- enforceable undertakings
- APRA’s ability to seek remedies for a contravention for an enforceable obligation
- review of APRA’s decisions by the Administrative Appeals Tribunal (AAT)
- ability of APRA to give approvals and make determinations and rules
Treasury is seeking feedback by 30th January.
