The Australian Prudential Regulation Authority (APRA) has emphasised the importance of minimising unnecessary regulatory costs and improving frameworks to better support productivity in the insurance sector. The message was delivered by APRA chair John Lonsdale during the Insurance Council of Australia (ICA) roundtable held in Sydney recently. The event brought together senior leaders from the general insurance industry, APRA, and the Australian Securities and Investments Commission (ASIC).
Referencing APRA’s official notes for the roundtable, Lonsdale outlined the strategic priority of achieving the right regulatory balance, stating that the authority is working to reduce undue compliance costs through targeted changes to its prudential framework. He also addressed the need for regulations that enable operational efficiency while maintaining sector stability. Lonsdale pointed to emerging risks, such as geopolitical uncertainty and a deteriorating cyber threat environment, as factors that further complicate the regulatory landscape.
During the roundtable, Lonsdale encouraged insurance executives to identify specific areas where regulatory frameworks could be improved to drive productivity. He invited participants to share their experiences and suggestions for enhancing coordination among regulators. “APRA looks forward to maintaining a close and open dialogue with industry and peer regulators, as we work together to ensure APRA’s approach is risk-based and proportionate,” Lonsdale said.
The roundtable provided an opportunity for open discussion on how regulation affects insurance affordability, product availability, and claims management. Executives and regulators examined ways to streamline compliance and align regulatory objectives with the government’s productivity agenda.
ICA CEO Andrew Hall described the session as a timely opportunity for engagement. “Discussions like this are critical in ensuring we can continue to drive our industry forward. I thank all who attended the roundtable, and we look forward to our ongoing regulatory engagement,” Hall said.
Following the roundtable, the ICA released a report estimating that regulatory obligations cost insurance customers between $2.5 billion and $3.5 billion each year. The Cost of Regulatory Burden report found that insurers are subject to more than 30,000 regulatory requirements, enforced by 25 authorities through 300 different instruments. The report identified reporting, governance, privacy, cyber security, claims handling, and breach reporting as major contributors to these costs.
According to the report, 66% of regulations are prescriptive, dictating how insurers must comply rather than focusing on outcomes. The ICA noted that this approach can limit innovation, create challenges for smaller insurers, and result in inflexible processes for customers. The report recommended several reforms, such as consolidating duplicative requirements, harmonising definitions across legislation, and improving coordination among regulators. Examples included repeated data requests during crises, duplicative breach reporting, and compliance burdens related to anti-hawking provisions and low breach reporting thresholds.
ASIC and APRA have identified more than 400 initiatives, including around 150 new actions, aimed at reducing regulatory inefficiencies. The ICA and industry leaders plan to continue engaging with regulators as further analysis is conducted on particularly burdensome requirements.
Hall stressed the importance of proportional regulation. “Australian insurance customers and our financial system benefit greatly from mature regulatory arrangements that are well-balanced. However, it’s important that we ensure that the cost of regulation – which is ultimately borne by consumers – is proportionate to the problems we’re attempting to solve,” Hall said. He added that effective regulatory structures have the potential to ease negative impacts, lower expenses, and enable insurers to process claims more quickly, while also encouraging innovation and healthy competition within the sector.
