The Australian Prudential Regulation Authority (APRA) has announced a significant escalation in oversight of KeyInvest Limited, imposing an additional capital requirement of $5.5 million and new licence conditions, following a recent review of the company’s risk management framework. KeyInvest, which operates as a life insurance company and friendly society primarily offering funeral bonds, has been flagged for deficiencies in its risk management practices.
An independent investigation, commissioned by APRA, highlighted notable weaknesses within KeyInvest’s risk management framework and raised concerns regarding the effectiveness of the board’s oversight of the company’s long-term objectives. In light of these findings, APRA has mandated that KeyInvest maintain an additional capital reserve of $5.5 million in its management fund as an operational risk capital add-on. This requirement will remain until APRA is satisfied that the identified issues have been adequately addressed.
In addition to the monetary requirement, APRA has stipulated further conditions on KeyInvest’s licence. These include the development of a comprehensive remediation plan to address the review’s recommendations and the creation of a board renewal plan subject to APRA’s approval.
KeyInvest has acknowledged the findings from the review and has already initiated steps to rectify the highlighted deficiencies. Nevertheless, APRA has indicated that further efforts are necessary to fully implement and confirm the effectiveness of the proposed remediation strategies.
APRA Member Suzanne Smith commented on the situation, stating, “It is the responsibility of boards to ensure that risk management frameworks are implemented and effective. The increased capital requirement reflects the heightened prudential risks and compliance concerns and should incentivise KeyInvest to complete remedial work.” She emphasised APRA’s commitment to protecting policyholders by maintaining a robust prudential framework and ensuring that insurers uphold their obligations.
Smith further added, “APRA will continue to take suitable action if insurers fail to meet its expectations,” reinforcing the regulatory body’s proactive stance in supervising the industry and safeguarding the interests of policyholders.
