It is important to emphasise that the role of prudential supervision and regulation has not been to dictate the commercial terms on which insurers should be providing insurance. For example, we have not sought to influence the trend towards risk-based pricing. Rather, our involvement has been to better understand what is going on, and to consider its impacts on soundness and efficiency.
In its ongoing review of the Reserve Bank Act4, the Government has made an in-principle decision to change the current objective of that Act from ‘soundness and efficiency’ to ‘protecting and promoting financial stability’.