Standard policy wordings exist for this type of policy. All policies which contain such standard wordings or where the wording is substantially similar are to be classified as ISR.
(VI). Marine
Includes Marine Hull (including pleasure craft), Marine Cargo (including sea and inland transit insurance).
(VII). Aviation
Aviation (including aircraft hull and aircraft liability).
(VIII). Mortgage
Insurance against losses arising from the failure of debtors to meet financial obligations to creditors or under which payment of debts is guaranteed. It includes lease guarantee.
(IX). Consumer Credit (CCI)
Insurance to protect a consumer's ability to meet the loan repayments on personal loans and credit card finance in the event of death or loss of income due to injury, illness or unemployment.
(X). Other Accident
Includes the following types of insurance:
Miscellaneous accident (involving cash in transit, theft, loss of money);
All risks (baggage, sporting equipment, guns);
Engineering when not part of ISR or Fire policy;
Plate glass when not part of packaged policy (e.g. houseowners /householders)
Guarantee (Insurance Bonds);
Live Stock;
Pluvius; and
Sickness and Accident (which provides stated benefits where the insured is killed or suffers loss of specific parts of the body or is prevented from carrying out the insured’s normal occupation. In addition, regular benefits may be paid over a short period of time (typically less than 3 years), noting that continuous disability policies are now considered to be Life Insurance Policies and should not be provided by General Insurance companies).
(XI). Other
All other insurance business not specifically mentioned elsewhere. It includes, for example:
All guarantees (e.g. fidelity Guarantee)
Trade Credit;
Extended Warranty (includes insurance by a third party for a period in excess of the manufacturer's or seller’s normal warranty;
Kidnap and Ransom; and
Contingency.
(XII). Compulsory Third Party Motor Vehicle (CTP)
This class consists only of CTP business.
(XIII). Public and Product Liability
Public Liability covers legal liability to the public in respect of bodily injury or property damage arising out of the operation of the insured's business. Product Liability includes policies that provide for compensation for loss and or injury caused by, or as a result of, the use of goods. and also environmental clean-up caused by pollution spills where not covered by Fire and ISR policies.
Also will include builders warranty insurance.
(XIV). Professional Indemnity (PI)
Includes Directors' and Officers' liability insurance plus legal expense insurance. Cover for legal expenses general included in this type of policy.
(XV). Employers' Liability (EL)
Includes:
Workers' compensation;
Seamen's compensation; and
Domestic workers compensation.
Reinsurance Business
The classes of business for companies that are specialist reinsurers are as follows:
(I). Facultative;
(II). Proportional; and
(III). Excess of loss.
(I). Facultative Reinsurance
The reinsurance of individual risks by offer and acceptance wherein the reinsurer has the “faculty” (option) to accept or reject each offer by the ceding company.
(II). Proportional Reinsurance
A proportional treaty is an agreement between an insurer and a reinsurer in which the reinsurer shares an identical proportion of the premiums and losses of the ceding company.
(III). Excess of Loss Reinsurance
Reinsurance which, subject to a specified limit, indemnifies the ceding company against the loss in excess of a specified retention. This type of reinsurance can involve:
any one risk reinsurance;
any one event reinsurance;
catastrophe reinsurance;
aggregate excess of loss reinsurance; and
stop loss reinsurance.
Reinsurance non-split
This line item classification disclosed under Reinsurance class of business is to be used where it is not possible for the insurer to separately slit out all the classes of reinsurance businesses. However as required by GGN 110.3 Insurance Risk Capital Charge, where an insurer writes inwards reinsurance business and is unable to split this business into the classes and types listed in Table 2 of this Guidance Note, they are to use the highest casualty factors on their outstanding claims liabilities.
Where an insurer writes inwards reinsurance which spans multiple classes and the insurer cannot readily split the contract between classes, APRA suggests that the contract should be allocated using one of the following methods:
(a) allocate the contract to the category which represents the greatest exposure; or
(b) allocate the contract to the category representing the greatest premium income.
An insurer that writes inwards reinsurance is free to choose which of the above methods it uses, or may use another appropriate method, provided the same method is used for all contracts and all subsequent periods.
(1) Premium Earned ($'000)
Premium earned is to be reported gross of reinsurance expense. Premium earned is to be reported in this form only in accordance with AASB 1023 (i.e. recognised on an earned and unearned basis).
The amount reported for Current Accident/Underwriting Year will then be the same reported for the Accident/Underwriting Year - 1Year Previous in the following financial year. For example:
Financial Year Ended
Current Accident/Underwriting Year
Accident/Underwriting Year – 1 Year Previous
Accident/Underwriting Year - 2 Years Previous
31 December 2001
4,000
2,000
31 December 2002
5,000
4,000
2,000
Premium revenue is to take into account the following:
Do not include amounts collected on behalf of third parties i.e. government stamp duty and taxes;
Levies charged to customers are to be included such as fire service levies;
Deduct returned premiums and rebates;
Premiums are to be brought to account from the attachment date;
For installment premium policies, the amount of the annualised premium is to be reported; and
Premium revenue must be gross of reinsurance expense.
(2) Number of Claims
Report the total number of claims recorded for each class of business (total not just new claims). DO NOT include in this figure the number of claims recorded in relation to IBNRs and do not include number of claims paid.
This column is not applicable for business written under proportional treaties as this information is generally not known.
(3) Gross Claims Paid ($'000)
Report the amount of gross claims paid attributable to each accident/underwriting year on a cumulative basis, for classes of direct written business and re-insurance business. Do not adjust for reinsurance recoveries received.
(4) Reinsurance and Other Recoveries Received ($'000)
Report the amount of reinsurance and other recoveries received on claims paid attributable to each accident/underwriting year on a cumulative basis, for classes of direct written business and re-insurance business. Do not include reinsurance and other recoveries recognised on an accrual basis.
(5) Reinsurance Recoveries Receivable ($'000)
Report the amount of reinsurance recoveries that are expected to be receivable in relation to those claims recognised in the calculation of the outstanding claims provision and claims paid.
The amount is the balance outstanding at the end of the year.
This is to be undiscounted.
This amount can be recognised in accordance with AASB 1023.
(6) Other recoveries receivable ($’000)
Report the amount of recoveries receivable other than recoveries from reinsurers (e.g. subrogation, salvage) as at the end of the development year for the specified accident/underwriting year, that are expected to be receivable in relation to those claims recognised in the calculation of the outstanding claims provision and claims paid.
The amount is the balance outstanding at the end of the year.
This is to be undiscounted.
(7) Case Estimate - Gross Outstanding Claims Liability ($'000)
The Outstanding Claims liability is to be disclosed by type of business (direct business and inward reinsurance business). This relates to the Outstanding Claims Liability as at the end of the development year for the specified accident/underwriting year.
For the purposes of this form, the outstanding claims liability must be:
The amount is the balance outstanding at the end of the year.
Undiscounted;
Gross of reinsurance recoveries;
Based on ‘Case Estimate’ only, do not include a risk margin; and
Do not include estimates of IBNR claims (Incurred but not reported).