AUSTRALIAN WATCHDOG CHIEF CRITICAL OF COOPERATION OF HIH INSURANCE.

MELBOURNE, April 2 Asia Pulse - Insurance watchdog chief Jeff Carmichael has said he is not satisfied with the cooperation of the management of failed insurance giant HIH Insurance as his staff tried to help save the company.

HIH, one of Australia's biggest general insurers, was given permission by the NSW Supreme Court last week to appoint KPMG as its provisional liquidator after discovering its losses had hit $A800 million ($US386.8 million).

The Australian Prudential Regulation Authority (APRA) has been criticised for not warning the market, and its one million policyholders, when it became aware of HIH's problems last July.

APRA has said any investigation would have caused alarm in the insurance market and damaged HIH.

"We worked very closely with them to try to upgrade their practices and procedures and it wasn't always as successful as we would have liked," Mr Carmichael told Business Sunday today.

"Management, in many cases, resisted. We also sought information and the information we were given was not timely and, in some cases, it has turned out to be inadequate for the situation."

He said under the new framework APRA is now developing, if it had been applied 12 months ago HIH's balance sheet would have looked very different in terms of ...