APRA slapped an additional capital requirement on insurer Allianz after gaps were identified by its governance risk self-assessment.
The insurer has been hit with an additional $250 million capital requirement by the prudential regulator following its risk governance self-assessment, which revealed remediation work was underway to strengthen its risk management and close gaps in its governance.
The additional capital requirement is the fifth applied by APRA in the wake of the landmark prudential inquiry into the Commonwealth Bank, which showed the bank's operational risk management framework "worked better on paper than in practice".
Following the inquiry, APRA hit CBA with an additional $1 billion capital requirement, and asked 36 banks, insurers and superannuation licensees to undertake self-assessments to determine whether the governance weaknesses found at CBA existed within other APRA-regulated entities.
After reporting their self-assessments, APRA imposed $500 million additional capital requirements on each of ANZ, NAB and Westpac.
APRA executive board member Geoff Summerhayes said the self-assessments proved the issues in CBA's risk governance work were not only common among Australia's banks, but the wider financial services sector.
"Last financial year, APRA-regulated general insurers paid out $27.5 billion to their policyholders. With Australians relying on these policies to financially protect them when things go wrong, it's essential that insurers have in place appropriate internal processes to honour those commitments," Summerhayes said.
"By imposing this additional capital requirement, APRA is providing a financial incentive for Allianz to quickly and effectively implement its planned remediation work. We also want to send a message to the broader insurance and superannuation industries that APRA expects the same high standards of risk management, including for non-financial risks, as we do for the banks."
APRA said its supervisors were providing "tailored feedback" to all 36 institutions that submitted self-assessments, and added it was still considering applying additional operational risk requirements to institutions with material weaknesses.
APRA said Allianz's extra $250 million capital requirement would remain in place until its remediation work was complete and gaps were closed.