The Australian Prudential Regulation Authority (APRA) revealed Tuesday that it has imposed an additional $5.5 million capital requirement on KeyInvest, alongside new licence conditions, following a review that identified weaknesses in the insurer’s risk management framework.
APRA Places Additional $5.5m Capital Requirement on KeyInvest
KeyInvest, a life insurance company and friendly society primarily offering funeral bonds, was subject to an independent review at APRA’s request.
The review is said to have uncovered deficiencies in its risk controls and raised concerns over board oversight of long-term strategic objectives.
As a result, APRA applied a $5.5 million operational risk capital add-on to KeyInvest’s management fund.
The additional requirement is expected to remain until APRA is satisfied that its concerns have been fully addressed.
The regulator said it has also mandated that KeyInvest design and implement a remediation plan to address the review’s recommendations, as well as develop a board renewal plan for APRA approval.
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.”
The regulator added that KeyInvest has accepted the findings and has begun addressing the issues, although APRA said more work is needed to ensure the remediation plan is fully effective.
“APRA will continue to take suitable action if insurers fail to meet its expectations,” Smith added, underscoring the regulator’s commitment to safeguarding policyholders and upholding robust prudential standards.
