Health Insurance (prudential standard) determination No. 6 of 2023 (Cth)

Health Insurance (prudential standard) determination No. 6 of 2023

Prudential Standard HPS 117 Capital Adequacy: Asset Concentration Risk Charge

Private Health Insurance (Prudential Supervision) Act 2015

I, Helen Rowell, a delegate of APRA, under subsection 92(1) of the Private Health Insurance (Prudential Supervision) Act 2015 determine Prudential Standard HPS 117 Capital Adequacy: Asset Concentration Risk Charge, in the form set out in the Schedule, which applies to all private health insurers.

This instrument commences on 1 July 2023. Dated: 24 May 2023

[Signed]

Helen Rowell Deputy Chair

Interpretation

In this instrument:

APRA means the Australian Prudential Regulation Authority. private health insurer has the meaning given in section 4 of the Act.

Schedule

Prudential Standard HPS 117 Capital Adequacy: Asset Concentration Risk Charge, comprises the document commencing on the following page.

Prudential Standard HPS 117

Capital Adequacy: Asset Concentration Risk Charge Objectives and key requirements of this Prudential Standard This Prudential Standard requires a private health insurer to maintain adequate capital against the risks associated with asset concentration in its activities. The ultimate responsibility for the prudent management of capital of a private health insurer rests with its Board of directors. The Board must ensure that the private health insurer maintains an adequate level and quality of capital commensurate with the scale, nature and complexity of its business and risk profile, such that it is able to meet its operations under a wide range of circumstances. The Asset Concentration Risk Charge is the minimum amount of capital required to be held against asset concentration risks. The Asset Concentration Risk Charge relates to the risk of a concentration in exposures to a particular asset, counterparty or group of related counterparties resulting in adverse movements in the private health insurer's capital base. This Prudential Standard sets out the method for calculating the Asset Concentration Risk Charge. This charge is one of the components of the prescribed capital amount for private health insurers.