CPS 230: The Looming Challenge for Agencies and What Comes Next

The Australian insurance industry is bracing for one of its most significant regulatory shifts in years—APRA’s CPS 230 Operational Risk Management standard, set to take effect on July 1, 2025. While designed to enhance risk governance and accountability across the sector, there’s growing concern about how the burden of compliance will be distributed, particularly for agencies and smaller industry players.

A Shifting Burden

CPS 230 mandates stronger operational resilience, risk management frameworks, and third-party oversight. While these changes are necessary to fortify the industry against systemic risks, the reality is that compliance responsibilities will not be evenly shared. Larger insurers have the resources—both in capital and personnel—to integrate these changes smoothly. But for agencies, the weight of new obligations may be overwhelming.

A recent article from Insurance News highlights a cascading effect: as insurers look to mitigate their own risks, they may push contractual, operational, and financial pressures downstream. This means agencies will likely face increased scrutiny, higher compliance costs, and more complex reporting structures—all without the same infrastructure to absorb the impact.

Agencies: Stuck Between Regulation and Reality?

For many agencies, CPS 230 presents a difficult balancing act. They must comply with stricter risk management standards while maintaining operational efficiency and client service.

Key challenges agencies are likely to face include:

• Increased administrative and reporting burdens – More documentation, audits, and governance requirements.
• Higher costs – Compliance often requires new software, legal reviews, and additional personnel.
• Stricter third-party risk assessments – Agencies may need to prove their operational resilience to their insurer partners, adding another layer of complexity.
• Potential business disruptions – As agencies adjust to new requirements, normal operations could be strained.

What Needs to Happen?

While agencies cannot escape compliance, there are ways to adapt proactively. Insurers and regulators must also recognize the challenges smaller players face and offer practical, scalable solutions to help ease the transition. Some key steps include:

• Investment in smarter compliance tools – Agencies need systems that streamline reporting, risk management, and operational oversight without overwhelming their teams.
• Stronger collaboration between insurers and agencies – Instead of simply passing on compliance obligations, insurers should work with agencies to create manageable frameworks.
• Education and support – Agencies need clear guidance on how to meet CPS 230 requirements efficiently, with best practices tailored to their size and role in the market.

Where Does InsuredHQ Fit In?

At InsuredHQ, we’ve seen this firsthand through our own APRA Submission audit on behalf of one of our customers last year. We know CPS 230 compliance isn’t just about ticking boxes; it’s about adapting to a more complex, interconnected risk environment. Agencies will need to rethink how they document processes, assess third-party risks, and ensure operational continuity—all while keeping their businesses running.

There’s no easy answer, but you’re not alone in this. As an industry, we need to talk about how we support agencies through this transition, not just enforce compliance. Hopefully, Australian agencies can leverage CPS 230 toward a stronger, more resilient business that keeps the market moving and diverse.

Looking Ahead

CPS 230 is a reality, and preparation is essential. The key question is how agencies, insurers, and regulators can work together to ensure compliance strengthens the industry rather than stifling its key players.