Regulatory AlertsHPS 114 Capital Adequacy: Asset Risk Charge
The Australian Prudential Regulation Authority issued Prudential Standard HPS 114 to require private health insurers to maintain adequate capital against asset risks arising from credit and market exposures. The standard mandates that insurers calculate an Asset Risk Charge by applying seven specific stress tests—including real interest rates, inflation, currency, equity, property, credit spreads, and default scenarios—to their funds' assets and liabilities. These calculated risk components are aggregated to determine the minimum capital required, ensuring insurers can meet obligations under a wide range of adverse economic circumstances.
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