Continuation of the Review of the Solvency and Capital Adequacy Standards included in the Private Health Insurance (Health Benefits Fund Administration) Rules 2007.

Under the Private Health Insurance Act 2007 (the Act) the Private Health Insurance Administration Council (Council) has the ability to make a number of standards including:

• Solvency standard – Division 140 of the Act
• Capital adequacy standard – Division 143 of the Act
• Prudential Standards – Division 163 of the Act

Council will be developing an integrated suite of standards over the coming years.

This will involve a strategic consideration of the solvency and capital adequacy standards in the broader context of prudential standards made under Division 163.

Consideration will be given to the minimum level requirements in relation to:

• Capital requirements
• Risk Management
• Outsourcing arrangements
• Group operation and contagion risk
• Broader operations of private health insurers.

Council will be concerned to ensure the standards reflect current best practice regulation while being sufficiently flexible to respond to emerging issues in the industry.

Industry will be consulted on the development of particular standards. Industry generally be given a two stage opportunity to provide input including via submissions in response to discussion papers and to draft legislation.

Consultation will occur as and when standards are developed it is expected that consultation on the first tranche of standards may occur by late in 2011.

Paul Groenewegen
Deputy CEO
PHIAC
02 6215 7966
paul.groenewegen@phiac.gov.au

12 May 2011

Proposed legislative amendments to the Private Health Insurance Act 2007 (the Act).

Since the commencement of the Act in 2007, the Private Health Insurance Administration Council (Council) has identified a number of issues in relation to the operation of the Act.

Council will progress a number of proposed amendments via consultation with the industry.

The areas of proposed amendment include:

• A proposal to include in the Act cost recovery powers in relation to industry initiated transactions
• A proposal to include new powers for Council in the consideration of applications to convert to for profit status under section 126-42 of the Act and applications for merger/acquisitions under section 146-5 of the Act
• A request that any reference or requirement in relation to the Common Seal of Council be removed.

Stakeholders will be given an opportunity to comment on the proposed amendments. Council will circulate a discussion paper in mid-2011 and allow 8 weeks for submissions to be provided. It is also likely that consultation will also be undertaken in relation to draft legislation should the proposals progress.

First round consultation mid-2011. Draft legislation late 2011 to early 2012.

Neil Smith
General Manager and General Counsel
PHIAC
02 6215 7931
neil.smith@phiac.gov.au

12 May 2011

Amendments to the Private Health Insurance (Insurer Obligations) Rules 2009 to introduce an outsourcing standard for private health insurers.

Private health insurers and industry stakeholders including the Department of Health and Ageing, the Australian Competition and Consumer Commission, the Australian Securities and Investment Commission and industry peak bodies will be invited to comment on the draft standard before it is introduced. 

Amendments expected to be completed by October 2012

Josh Edwards

12 May 2011

Amendment to the Private Health Insurance (Insurer Obligations) Rules 2007

The amendment to the appointed actuaries’ standard will reflect changes by the Institute of Actuaries of Australia to the status of Guidance Note 670 to Professional Standard 600. The change is industry-driven.

Professional Standard 600 will apply to an appointed actuary preparing a Financial Condition Report (FCR) for a private health insurer and essentially updates the existing guidelines in Guidance Note 670.

The proposed change is industry-led, it is appropriate to inform industry once amendments are introduced.

August 2011

Josh Edwards

12 May 2011