Auto & General Insurance slapped with $50m capital requirement

The news: Large insurer Auto & General Insurance Company Limited has been mandated to increase its capital requirements and undertake a risk and remediation program after the prudential regulator found it had an immature risk culture.

The numbers: APRA imposed an additional $50 million operational risk capital requirement, which will take effect from 1 February 2024, until the regulator is satisfied its concerns have been remediated.

The context: APRA identified significant weaknesses in Auto & General’s risk governance, risk management and compliance practices. This included capability and capacity weaknesses in its risk function, ineffectiveness of the three lines of defence model, and weak risk reporting. There were also unclear accountabilities and responsibilities across the business and an immature risk culture. Last year, ASIC sued Auto & General for alleged unfair insurance contract terms and the matter is listed for trial on 4 and 5 March 2024. The firm is the underwriter for companies including Budget Direct, Qantas, ING Bank and Virgin Money.