Australian insurers asked to review risk frameworks as pandemic-related claims surge

The QBE Insurance logo is seen on an office building in Melbourne
FILE PHOTO: The QBE Insurance logo is seen on an office building in Melbourne February 28, 2011. REUTERS/Mick Tsikas

July 19, 2021

(Reuters) – Australia’s prudential regulator on Monday directed general insurers to review their risk management frameworks after a spate of claims over COVID-19-related business interruptions.

Many insurers were exposed to such claims through policy wordings that had not kept up to date with changing legislation, the Australian Prudential Regulation Authority (APRA) said.

“The resultant legal uncertainty, and significant financial exposure for insurers, has raised concerns about the strength of insurers’ risk management frameworks,” the regulator said in a statement.

The regulator’s directive also came after a class action lawsuit against Australia’s largest listed insurer, QBE Insurance, for allegedly denying cover to policy holders for losses from business interruptions.

APRA has set a Nov. 30 deadline for completing and submitting the self-assessments.

(Reporting by Riya Sharma in Bengaluru; Editing by Subhranshu Sahu)