The Australian Prudential Regulation Authority (APRA) has applied an additional $2 million capital requirement to Sovereign Insurance Australia Pty Ltd (SIA), reflecting SIA's heightened risk profile due to weaknesses in managing non-financial risk and regulatory reporting.
APRA has identified serious deficiencies in SIA's risk management framework and its management of operational risk. APRA's concerns are 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.
APRA Member Suzanne Smith said: "Insurance underpins financial stability for millions of Australians. APRA's prudential framework and active supervision are critical to ensuring insurers meet their commitments. 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. APRA will take further action if necessary to ensure policyholder interests are protected."
The additional capital requirement takes effect today and will remain in place until APRA's concerns have been addressed and all weaknesses rectified.
