New Operational Risk Expectations Put Insurer Reliability in Focus

The standard requires APRA-regulated insurers to take a more disciplined approach to operational risk, including business continuity planning, oversight of material service providers and the management of critical operations. In plain English, insurers are expected to know which functions are vital, how quickly they need to recover after disruption, and whether outsourced providers can meet those expectations.

For households, this may show up most clearly during claims. A policy can look competitive at purchase, but its real value depends on the insurer’s ability to communicate, assess damage, make decisions and pay valid claims without avoidable delays. Stronger operational resilience should encourage insurers to test their systems and supplier arrangements before they are under pressure.

For small businesses, the message is broader. Many firms now depend on digital platforms, specialist suppliers and connected payment systems. If an insurer is asking more detailed questions about cyber controls, business continuity, record keeping or key dependencies, it may be responding to the same risk environment that APRA is trying to address. That can feel onerous at renewal, but it can also help identify gaps before a loss occurs.

This is where insurance brokers can add value. A broker can help explain why an insurer is asking particular underwriting questions, whether exclusions or sub-limits are material, and how different policies treat interruption, technology failure, outsourced operations and supplier-related losses.

Policyholders can use the regulatory shift as a prompt to review their own arrangements. Useful questions include:

• Do you know which business activities would be most difficult to continue after a systems failure or supplier outage?
• Are your sums insured and interruption periods based on current replacement costs and realistic recovery timeframes?
• Do your policies clearly respond to the events you are most exposed to, including cyber, storm, fire, theft or liability claims?
• Have you documented key assets, contracts, invoices and evidence that may be needed during a claim?

For businesses reviewing technology exposure, it may also be useful to estimate a sensible cyber insurance limit before renewal discussions begin. CPS 230 does not guarantee smoother claims or lower premiums, but it reinforces a simple lesson: resilience matters before the disruption arrives.