Regulator Enforces Capital Boost on Insurer Over Compliance Issues

2

APRA highlights that such arrangements, often referred to as binder holder agreements, enable third-party intermediaries to facilitate insurance policy issuances on behalf of the principal insurer.

This enforcement represents a pivotal regulatory move since Suzanne Smith, an influential figure within APRA, signaled the sector's forthcoming intensified focus on the administration of outsourced functions to intermediaries like underwriting agencies and brokers.

Detailed evaluations unearthed critical lapse in governance and risk management associated with the insurer's binder operations. The scrutiny brought to light several concerns, including deficiencies in accountability and the sufficiency of its resource allocation strategies.

According to Ms. Smith, even when the underwriting processes are entrusted to external entities, the onus of accountability centers unmistakably on the insurers themselves. She asserted, “Outsourcing can help with solutions for hard-to-place risks or reduce operational costs for insurers, but it is crucial to understand that the overall risk stays with the insurer, as insurance risk and accountability are the reason why insurers hold licences in the first place.”

Further, Ms. Smith reiterates the regulatory body's stance on enforcing compliance, stating that APRA will persist in taking measures deemed necessary when insurers fall short of the expected standards.

Following this regulatory directive, Pacific International has recognized the assessment's conclusions and is underway with a plan outlining corrective measures. Despite this initiative, the regulator affirms that more endeavors are required to cement these changes within the company’s operational practices and to assure APRA of effective rectification.

Originating from the briefings by insuranceNEWS.com.au, Pacific International’s outreach for commentary remains pending.

The statistics indicate that Pacific International had secured a prescribed capital amounting to $29 million by June 30 of the preceding year. The period also saw the firm observing a gross earned premium of $229 million and gross incurred claims valued at $85 million, culminating in an underwriting profit of $24 million.

Renowned on an international scale, Pacific International affiliates itself with South Africa's Badger International-a conglomerate with extensive interests in the insurance domain.

Published:Friday, 8th Nov 2024
Source: Paige Estritori

Share this news item:

Insurance News

Clear

Insurance Industry Calls for Liability Law Reforms as Costs Skyrocket for Entertainment Sectors

16 Oct 2025: Paige Estritori

The Insurance Council of Australia (ICA) is advocating for comprehensive reforms in liability laws to tackle rising insurance premiums, particularly impacting sectors such as live music venues, festivals, caravan parks, and amusement venues. The call comes with the release of a white paper highlighting that outdated state-based civil liability laws, untouched for nearly 25 years, are inflating costs significantly. - read more

Surge in Profits for Australian Insurers Amid Rising Premiums

15 Oct 2025: Paige Estritori

In 2024, Australia's insurance industry reported a collective after-tax profit of $6.1 billion, a significant increase from the five-year average of $2 billion. This surge is attributed to substantial premium hikes and a relatively quiet year for natural disasters. - read more

Rising Insurance Costs Challenge Australian Businesses Amid Crime Surge

15 Oct 2025: Paige Estritori

Australian businesses are confronting escalating insurance premiums, driven by a surge in break-ins and thefts. This trend is placing additional financial strain on business owners already navigating a complex economic environment. - read more

Allianz Australia Penalised for Misleading Insurance Practices

15 Oct 2025: Paige Estritori

In a significant regulatory development, Allianz Australia and its subsidiary, AWP Australia, have been fined $16.8 million for making false and misleading statements. This penalty underscores the critical importance of transparency and honesty in the insurance industry. - read more

Allianz Australia Completes Acquisition of RAA Insurance

15 Oct 2025: Paige Estritori

Allianz Australia has successfully completed the acquisition of RAA Insurance for $642 million, marking a significant expansion of its operations in South Australia. This strategic move is set to enhance Allianz's market presence and diversify its service offerings in the region. - read more

Click for more Insurance News