The Australian Prudential Regulation Authority (APRA) has placed an additional $5.5 million capital requirement and imposed additional licence conditions on KeyInvest Limited (KeyInvest), following a review of its risk management framework. KeyInvest is a life insurance company and friendly society that primarily offers funeral bonds.
An independent review undertaken at APRA's request identified shortcomings in KeyInvest's risk management framework and raised questions about the board's oversight of the insurer's long-term objectives.
As a result, an additional $5.5 million capital requirement has been applied to the management fund of KeyInvest as an operational risk capital add-on. This will remain in place until APRA is satisfied its concerns have been addressed.
Additional licence conditions have also been imposed, including the requirement to design and implement a remediation plan addressing the review's recommendations and to develop an APRA approved board renewal plan.
KeyInvest has accepted the findings and already taken steps to address the recommendations. However, further effort is required to implement and confirm the effectiveness of the remediation plan.
APRA Member Suzanne Smith said: "It is the responsibility of boards to ensure that risk management frameworks are implemented and effective. The increased capital requirement reflects the heightened prudential risks and compliance concerns and should incentivise KeyInvest to complete remedial work.
"APRA protects policyholders by upholding a robust prudential framework and exercising active supervision, giving confidence to policyholders that their insurers can fulfil their obligations. APRA will continue to take suitable action if insurers fail to meet its expectations," Ms Smith added.
