APRA plans to modernise Australia’s prudential architecture and has started to overhaul its framework, APRA chair Wayne Byres revealed today (May 13).

He told the The Regulator event, held by the Financial Services Institute of Australasia, APRA’s objective was to make the framework “more cohesive, easier to understand and navigate and less costly to maintain and update”.

A second important initiative was the five-year roadmap laid out in March to transform APRA’s approach to collecting financial data.

Critical to that was its new data collecting system APRA Connect, which enabled the regulator to collect deeper and broader data sets, which peer agencies could use.

“But we have a major task to review and transition existing collections into the new system,” Byres said. “Only when we have done that can we harness the full benefits of APRA Connect, (ie) better data for users, collected at lower cost to the industry,” Byres said.

He said the March roadmap set out a plan for each industry, tailored to reflect the work already underway on new data collections, the expected regulatory policy agenda and the industry’s capacity to accommodate change.

Byres said Australia’s insurance industry was “financially sound” but the growing lack of affordability and availability of insurance was increasingly common in all three industry sectors, ie general, life and health insurance.

“Be it because of poor product design, rising claim costs, increasing litigation, or a changing climate, insurers are increasingly raising the price and/or reducing the coverage of the policies they sell,” he said.

“While that may be a sensible business decision for individual insurers in the short run, in the long run it leads to premiums that become unaffordable, cover that is poor value or even products that are simply not available.” 

Byres said APRA had an important role to ensure insurers improved their product design, pricing, claims and exposure management.

Regarding superannuation, Byres said the system “can be better”. “Put simply, when it comes to superannuation, good enough isn’t good enough. We still have too many trustees that could do better – including, in some cases, by handing their responsibilities to someone else,” he said.

As Australians increasingly moved into the retirement phase, a growing area was the provision of retirement products and much greater attention was needed in “a space ripe for innovation and thinking”.