Super Alert – 1 May 2026: APRA Prudential Standard CPS 230 update, industry-wide letter on AI use, life insurance stats released

Welcome to the weekly KHQ Super Alert. This week, APRA released its long-awaited update to Prudential Standard CPS 230, published an industry-wide letter on the use of AI tools, and released its biannual life insurance claims and disputes data. Meanwhile, the Economics Legislation Committee released its report on proposed changes to Australia’s financial reporting systems.

 APRA – Targeted amendments to CPS 230 finalised

On 30 April 2026, APRA released its final targeted amendments to Prudential Standard CPS 230 Operational Risk Management (CPS 230) and Prudential Practice Guide CPG 230 Operational Risk Management (CPG 230).

The amendments to the materials ‘introduce limited exemptions from specific contractual requirements for material arrangements with certain categories of service providers, where contractual compliance is not practicable’ and ‘clarify APRA’s expectations for managing material arrangements with exempt service providers’.

The updated CPS 230 includes a list of the currently exempt service providers who do not need to comply with certain paragraphs of CPS 230, provided that the relevant arrangement uses standardised terms or is not documented in a formal agreement. These service providers are:

• Government agencies;
• regulators;
• central banks;
• financial market exchanges;
• operators of clearing and settlement facilities, and operators of payment systems and schemes; and
• financial messaging infrastructures.

Click here and here for details.

APRA – Letter to industry on use of AI

On 30 April 2026, APRA published a letter to industry warning that current governance, risk management, assurance and operational resilience practices are not sufficiently keeping pace with the scale, speed, and complexity of AI adoption.

The letter outlined the ‘observations and APRA’s expectation in managing AI related risk’ that followed a targeted engagement conducted by APRA with a group of large banks, insurers and superannuation trustees in late 2025.

In its letter APRA stated it expects boards, at a minimum, to:

• ‘maintain sufficient understanding and literacy with respect to AI in order to set strategic direction and provide effective challenge and oversight’; and
• ‘oversee an AI strategy which is consistent with the entity’s risk appetite and tolerance settings, supported by effective monitoring and reporting (including for third party dependencies), with clearly defined triggers aligned to resilience objectives to enable timely action when not operating as expected.’

These expectations follow APRA’s findings that:

• ‘AI threats are increasing, but information security practices are struggling to keep pace’;
• ‘AI adoption is moving fast, but governance maturity is lagging’;
• ‘Supplier risk management is in place, but supplier concentration and opacity present challenges’; and
• ‘Traditional change management and assurance is in place but is not sufficient for dynamic AI solutions’.

Click here for details.

APRA – Life insurance statistics released

On 29 April 2026, APRA released its statistics on life insurance claims and disputes publication, which includes data on group life insurance offered by superannuation funds. This data is for the rolling period from 1 January 2025 to 31 December 2025. Some key findings for insurance through superannuation were:

• an industry average of 98.1% ‘claims admitted rate’ for death cover;
• an average insurer claim time of 0.8 months for death cover;
• an industry average of 90.2% ‘claims admitted rate’ for total and permanent disability cover; and
• an average insurer claim time of 3.5 months for total and permanent disability cover.

Click here for details.

Parliament – Bill proposing changes to Australia’s financial reporting system introduced

On 24 April 2026, the Economics Legislation Committee (a Senate Standing Committee) released its views and recommendations on the Treasury Laws Amendment (Financial Reporting System Reform) Bill 2026. As reported in our Super Alert of 13 February 2026, the Bill aims to develop ‘more flexible institutional arrangements’ for the setting of external reporting standards by establishing a dedicated board of experts for ‘the development and ongoing maintenance of the new sustainability standards, but also to better position the financial reporting system to respond to standard-setting needs that may arise in the future’.

The Committee considered a range of feedback on the Bill and ultimately recommended that it be passed in its current form, noting that those who made submissions were largely supportive of the Bill.

Click here for details.

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