(Re)Insurance and Regulation Focus - fortnight commencing 27 October 2025
28 October 2025
Key developments in the last fortnight
APRA revises its prudential governance framework proposals
In March, APRA proposed eight measures to modernise the prudential governance framework for the first time in more than a decade. Following a three-month consultation with stakeholders, APRA has advised the industry that it will modify three proposals to lift the undue regulatory burden on Boards, including now proposing a hard tenure limit of 12 years for non-executive directors and withdrawing the proposed requirements for banks and insurers to have at least two independent directors and for significant financial institutions to engage with APRA early on responsible person appointments and succession planning. APRA aims to uplift the governance prudential standards while maintaining a balance in regulation, with further consultation to come in the first half of next year.
APRA revises governance proposals following industry consultation
Offshore outsourcing back in ASIC’s spotlight
ASIC has raised concerns about the governance and risk management practices of financial services licensees outsourcing functions to offshore service providers. A recent review found significant variations in the quality of risk management arrangements with some entities lacking adequate frameworks altogether. ASIC Commissioner Alan Kirkland emphasised that Australian financial services licensees remain responsible for all of their operations, including those that are outsourced in whole or in part, and that entities must ensure that outsourced functions do not expose consumers to harm.
ASIC flags risks in offshore outsourcing after review identifies governance gaps
APRA consults on adjustments to general insurance reinsurance framework
APRA has launched a consultation on targeted adjustments to the general insurance reinsurance framework, aiming to make it easier for insurers to access a broader range of reinsurance arrangements, including alternative structures such as catastrophe (cat) bonds. Recent years have seen an increase in primary insurers across the world sponsoring cat bonds, 54% up from 48% in 2023, with the global cat bond market growing 50% up to $55 billion in the same time. APRA’s proposed changes include allowing insurers to measure their 1-in-200 year loss based on the largest single peril rather than the entire portfolio, reducing reinstatement return-periods and removing certain premium-holding requirements under the Insurance Concentration Risk Charge. APRA views these proposals as being able to facilitate better access to cost-effective reinsurance. APRA is seeking responses by 30 January 2026 and proposing to release new standards in the first half of 2026 with changes coming into effect January 2027.
Targeted adjustments to the general insurance reinsurance framework
Review of Life Insurance Code underway
The independent review of the Life Insurance Code of Practice is underway, with industry participants and the public being invited to provide submissions. The review is being led by former ASIC Deputy Chair Peter Kell and focuses on key areas such as clarity of insurer commitments, support for vulnerable customers and the quality of communications particularly during the claims process. Feedback is also being sought on how compliance with the Code is being monitored and enforced. Submissions are open until 15 December 2025, with an interim report expected in early 2026.
Life Insurance Code of Practice Review
AFCA report on insights into systemic issues
AFCA has released the newest edition of its Systemic Issues Insights Report, covering the second half of the 2024-25 financial year. The Report highlights systemic issues that affected over 342,000 consumers and small businesses during the period. Recurring themes of the Report include failures in complaints handling, gaps in support for vulnerable customers, reliance on outdated systems and misalignment between policy intentions and frontline execution. Beyond financial remediation (which AFCA estimates at approximately AU$3.4 million), the Report emphasises non-financial outcomes, such as credit-file corrections, improved disclosures and enhanced hardship processes, as critical to restoring trust across the industry. AFCA also found that ambiguous wordings, confusing structures and misleading terms are systemic issues in general insurance disclosure documents which contribute to high rates of declined claims and increasing disputes.
AFCA publishes latest edition of its Systemic Issues Insights Report
ICA calls for reform to reduce business insurance costs
The Insurance Council of Australia (ICA) has called for urgent reforms of State and Territory civil liability laws, highlighting that some frameworks haven’t been reviewed in nearly 25 years and are now contributing to soaring public liability insurance costs (up to 60% since 2019). The ICA’s white paper pinpoints three major cost-drivers: psychological injury claims, outdated legislation around dangerous recreational activities and obvious risks, and escalating worker-to-worker liability cases. The ICA is urging Federal and State Governments to modernise definitions, tighten claim periods and align laws nationally, emphasising that without reform, sectors such as live-music, festivals and caravan parks may continue to face unsustainable insurance price pressures. This move has been supported by the Australian Amusement Leisure & Recreation Association stating that insurance affordability and accessibility have become critical risks to business continuity in their sector.
Reform of state laws needed to reduce business insurance costs
Marsh suffers Greensill setback
In the continuing fallout from the Greensill collapse, the global insurance broker Marsh has been given a ruling by the Federal Court of Australia that blocked the firm from pursuing its London-based anti-suit action against Greensill Bank AG as part of a broader USD $7 billion dispute. The court deemed Marsh’s attempt to rely on exclusive English jurisdiction clauses as interfering with legitimate Australian proceedings, including claims of misleading conduct and negligence, and granted what’s known as an anti-anti-suit injunction. This ruling underscores the Australian judiciary’s willingness to assert control in cross-border disputes, signalling that contractual forum selection clauses may not always protect international entities from domestic liability.
Marsh loses important anti-anti-suit over Greensill $7 billion lawsuit
ASIC’s final FSRC case study action dismissed
The Federal Court has dismissed ASIC’s claim against former Freedom Insurance director Keith Cohen and consultant Robert Oayda, who were accused of engaging in unlawful sales practices. This action was the final remaining action brough by ASIC as part of its case studies and investigations arising from the Financial Services Royal Commission. ASIC alleged that the accused’s involvement in sales incentive programs led to conflicted remuneration and that Mr Cohen had breached his directors’ duties. However, the Court found insufficient evidence to support these claims and dismissed the case accordingly.
Federal Court dismisses ASIC’s claims against former Freedom Insurance director and consultant
ARPC releases Annual Report for FY24-25
The Australian Reinsurance Pool Corporation (ARPC) has released its Annual Report for the 2024-25 financial year, detailing the performance of its cyclone and terrorism reinsurance pools. The Report highlights the significant impact of Tropical Cyclone Alfred, which contributed towards an operating deficit of $891 million and $130.7 million in claims paid out for cyclone events during the 2024-25 season. The cyclone pool now covers over 3.2 million buildings nationwide with annual premiums estimated at $563 million for home insurance, $56 million for strata and $25 million for small to medium enterprise properties. The ACCC reported that while policyholders in medium-to-high cyclone risk regions have seen a reduction in premium, properties with low or no cyclone risk have experienced premium increases. The Federal Government initiated a review of the Terrorism and Cyclone Insurance Act 2003 (Cth) in October 2025 to evaluate the effectiveness of the law, and submissions from stakeholders are invited until 11 November 2025.
APRA Executive Board Member emphasises the need to maintain financial stability
At the 2025 Insurance Council of Australia (ICA) Conference, APRA Executive Board Member Suzanne Smith emphasised the importance of the insurance industry maintaining financial stability and protecting consumers. She discussed APRA’s approach to regulation which focuses on ensuring that insurers manage risks effectively and maintain adequate capital. Ms Smith addressed how the sector can prepare itself by focusing on resilience, innovation, and leadership in light of rising risks such as climate change, cyber threats, and geopolitical instability. Ms Smith also highlighted the need for the industry to adapt to emerging challenges, including climate change and technological advancements, to continue to serve the community effectively, concluding that effective leadership and a healthy risk culture are essential for building trust and ensuring the industry remains robust and prepared for future challenges.
APRA Executive Board Member Suzanne Smith - Remarks to the ICA conference 2025 | APRA
NIBA report serves as a call to action for broking industry
The National Insurance Brokers Association (NIBA) has released a report highlighting the significant technology, regulatory and evolving risks that are challenging brokers’ preparedness. The report highlights that whilst 83% of respondents expect technology and automation to reshape the industry by 2035, only 61% actually feel prepared for this. The report also flags challenges in increasing regulation, product innovation, workforce challenges and industry consolidation. NIBA stresses that brokers who embrace digital tools, education, and strategic advisory will thrive, while maintaining personalised service will be key to staying competitive.
Ready or Reacting? Shaping the Future of the Insurance Broking Profession
Key dates
- 11 November 2025 – Treasury’s consultation closes on Terrorism and Cyclone Insurance Act 2003 review.
- 12-13 November 2025 – ASIC Annual Forum 2025.
- 15 December 2025 – ASIC’s consultation closes on the Life Insurance Code of Practice review.
- 30 January 2026 – AFCA’s consultation closes on targeted adjustments to the general insurance reinsurance framework.
In case you missed it
The Sparke Team have been conducting whistleblower and FAR scenario testing for a number of clients. Please reach out if this is of interest to you!
