Claims expenseClaims expense

Claims expense

Claims expense for the purpose of this form is reported in relation to the following:

• claim payments made in the current year, and
• movements in OCL.

The column ‘Total gross claims expense’ is calculated automatically and is derived from the above components in the following way:

• claim payments made in the current year

Less:

• OCL at beginning of financial year

Add:

• OCL at the end of the reporting period

Note: All components required for the calculation of ‘Total gross claims expense’ are to be reported gross of reinsurance recoveries and non-reinsurance recoveries.

Claims expense that relates to movements in the OCL is to be based on the OCL that is reported in GRF 300.0 Statement of Financial Position.

Note: The OCL reported in GRF 300.0Statement of Financial Position does not have to be equal to the amounts required by Prudential Standard GPS 310 Audit and Actuarial Reporting and Valuation or the amounts reported in GRF 210.0 Outstanding Claims Provision - Insurance Risk Charge.

The total amount of claims expense reported in this form must match the total claims expense reported in the line item titled ‘Gross Claims Expense’ in GRF 310.0 Statement of Financial Performance.

The claims expense is to be disclosed by type of business (i.e. direct business and inwards reinsurance business).

Other recoveries revenue relating to current and prior years

Report the amount of recoveries other than reinsurance in relation to claims recognised in the calculation of the gross claims expense relating to current and prior years

Recoveries other than reinsurance are to be disclosed by type of business (i.e. direct business and inwards reinsurance business).

Reinsurance recoveries revenue relating to current and prior years

Report the amount of reinsurance recoveries in relation to claims recognised in the calculation of the gross claims expense relating to current and prior years.

The total amount reported in this form for this component must match the item titled ‘Reinsurance recoveries revenue relating to current and prior years’ in GRF 310.0 Statement of Financial Performance.

Reinsurance recoveries are to be disclosed by type of business (i.e. direct business and inwards reinsurance business).

Net claims expense

This is calculated automatically by the form and is derived as follows:

• Total gross claims expense

Less

• Other recoveries revenue relating to current and prior years

Less

• Reinsurance recoveries revenue relating to current and prior years.

Current period net claims expense

Report at this item by class of business:

• current period claims payments;
• current period reported outstanding case estimates (that is case estimates created in the current period); and
• current period incurred by not reported (IBNR) (and incurred but not enough reported) claims expenses.

Current period net claims expense should be defined and reported according to the following:

• the current period is defined as the current financial year to date;
• net of all recoverables (including input tax credits (ITCs), reinsurance, salvage, subrogation and other recovery types);
• inclusive of claims handling expense, assuming that industry generally includes claims handling costs with the claim paid component of the incurred claims expense;
• the outstanding claims component be inflated only i.e. undiscounted; and
• the outstanding claims component be on a central estimate basis i.e. without risk margins.

Non-recurring items that are part of total net claims expense

Report the amount of ‘Net claims expense’ that has not been reported at ‘Current period net claims expense’ in this column.

Quarterly actuarial reviews are not required to be conducted specifically for the purposes of completing the above two items.