Regulatory AlertsGPS 116 Capital Adequacy: Insurance Concentration Risk Charge
The Australian Prudential Regulation Authority issued Prudential Standard GPS 116 to require general insurers and Level 2 insurance groups to maintain adequate capital against risks linked to insurance concentration. The standard mandates the use of a prescribed method to calculate the Insurance Concentration Risk Charge, which covers potential adverse capital movements from single large or series of smaller losses. This charge forms a component of the Standard Method for determining the prescribed capital amount and applies to regulated institutions from 1 July 2023.
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