Regulatory AlertsPrudential Standard LPS 115 Capital Adequacy: Insurance Risk Charge
The Australian Prudential Regulation Authority issued Prudential Standard LPS 115 to require all life insurers, including friendly societies, to maintain adequate capital buffers against insurance risks. The standard mandates a prescribed calculation method for the Insurance Risk Charge, which serves as the minimum capital required to cover adverse impacts from mortality, morbidity, longevity, lapses, and servicing expenses. It establishes detailed rules for determining stressed policy liabilities using specific stress margins, diversification factors, and allowable management actions to ensure financial resilience.
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