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Appointment of provisional liquidator to HIH Insurance, Labor comment.



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  Australian Labor Party   National ALP

Kelvin Thomson - Appointment Of Provisional Liquidator To HIH Insurance - Labor Comment http://www.alp.org.au/media/0301/ktmshih160301.html Wednesday, 21 March 2001

Appointment Of Provisional Liquidator To HIH Insurance - Labor Comment Kelvin Thomson - Shadow Assistant Treasurer

Media Statement - 16 March 2001

The appointment of a provisional liquidator to the HIH Insurance Group last night brings home the need for APRA and the Government to urgently complete the Review of the Insurance Act commenced in September, 1999.

In September 1999, the Australian Prudential Regulation Authority (APRA) issued policy discussion papers which were aimed at "modernising the prudential supervisory requirements for general insurance in Australia".

This was followed up by a policy discussion paper in April 2000 entitled Proposed Reforms to the Prudential Supervision of General Insurance Companies in Australia.

That paper stated that a draft proposed Prudential Standard on Operational Risks would be released by APRA for comment in the near future.

It is now nearly 12 months since that policy discussion paper was released and the draft Prudential Standard on Operational Risk was promised.

The appointment of a provisional liquidator to the HIH group suggests that the Government's review of the Insurance Act needs to be conducted with rather more haste than has been shown so far.

This review deals with important issues such as authorisation requirements for general insurers, capital adequacy, valuation of liabilities, qualitative requirements for re-insurance arrangements, and operational risks.

It is high time APRA released the proposed prudential standard on operational risk, and moved to present its final recommendations to government.

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It is also high time the Howard Government, which has shown no sense of urgency regarding this review, moved to ensure that the prudential standards in the Insurance Act reflect changing realities in the Insurance Industry. In Australia general insurers hold total assets of around $60billion and the Government needs to ensure proper prudential supervision and community confidence in this industry.

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Authorised by Geoff Walsh, 19 National Circuit, Barton ACT 2600.

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