Outstanding Claims ProvisionOutstanding Claims Provision

Outstanding Claims Provision

The Outstanding Claims Provision is to be disclosed by type of business (direct business and inward reinsurance business), net of reinsurance and non reinsurance recoveries, as at the reporting date.

The Outstanding Claims Provision relates to the liability provision that has been recognised by the insurer in GRF 300.0 Statement of Financial Position, however for the purposes of this form, the Outstanding Claims Provision must be undiscounted.

For the purposes of this form the total of the OCP for the current financial year (on an undiscounted basis) is to be allocated across the respective time buckets specified on the form. Accordingly, each year that this form is completed the OCP that is recorded for the respective time buckets will likely change as this is reassessed.

For the “Direct business” and “Reinsurance” business, amounts are to include all Outstanding Claims Provisions associated with:

• the insurance business written directly by the insurer;
• reinsurance business under the “Reinsurance” section of Type of Business column. Inward reinsurance includes amounts, which relate to inward facultative reinsurance and to inward treaty reinsurance.
• business sourced through underwriting pools or Joint Ventures, or portfolio transfers/acquisitions.

Accident Year

Direct writers of insurance business are to complete this form based on accident year. This refers to the year that the losses/claims associated with individual policies are incurred.

Underwriting Year

Writers of reinsurance business can complete this form based on underwriting year. Underwriting year refers to the year that the individual policy attaches and the subsequent risk associated with this policy accepted by the insurer, regardless of when the premiums and losses are actually reported, booked or paid. For example the 2001 underwriting year includes results in calendar year 2001 and all future calendar years on business bound in 2001.

Reserve Release

Reserve release refers the occasions when a provision was created/posted for a particular prior financial year and subsequently it is found that this provision will be more than is required to pay for the losses associated with this particular accident year for direct writers of insurance and underwriting year for reinsurance writers. In these instances the insurer releases these excess provisions and they become profits in the current financial year of the insurer.

Claim payments (that are debited out of the outstanding claims provision for accounting purposes) are not to be classified as a reserve release for the purposes of this form.

Reserve Strengthening