Regulatory AlertsHPS 117 Capital Adequacy: Asset Concentration Risk Charge
The Australian Prudential Regulation Authority issued Prudential Standard HPS 117 to require all private health insurers to maintain adequate capital against risks arising from asset concentration. The standard mandates that insurers calculate an Asset Concentration Risk Charge based on specific exposure limits for reinsurance and non-reinsurance counterparties, with the Board of Directors holding ultimate responsibility for prudent capital management. It establishes detailed methodologies for aggregating exposures, defining related parties, and applying risk mitigants such as eligible collateral and guarantees to determine the minimum capital required.
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