Financial Sector (Collection of Data) (reporting standard) determination No. 104 of 2023
In ForceCTH
Jurisdiction
Commonwealth
Collection
legislative instrument
Plain English Summary
8/10 complexity
What this instrument does (mechanically)
This is a reporting standard requiring every Australian private health insurer to supply APRA (the prudential regulator) with detailed data used to calculate the insurer’s Asset Risk Charge (the capital required to cover losses from asset value changes). (see Purpose and Application: paras 2–4)
It prescribes how, when and in what format that information must be provided: electronic submission via APRA systems (para 5); quarterly and annual reporting cycles (para 6–8); time limits for lodgement and extensions (paras 8–9); and four specific reporting tables (Adjusted Pre‑Stress Amount; Impact on Capital Base; Counterparty Grade; Yields). (paras 5–9; Reporting tables section; Tables 1–4)
It sets data content and measurement rules: look‑through treatment for pooled investments, gross reporting of derivatives, exclusions (assets already deducted from capital or subject to concentration charges), units/precision, and which stress scenarios to apply and report (only positive risk charge components). The tables list many individual balance‑sheet line items and stress types for which insurers must report pre‑stress values and stressed impacts. (General instructions; Asset stress scenario; Table instructions)
It requires governance and assurance around reported data: internal systems, Board/senior management responsibility for authorisation (para 10); annual external audit and auditor certificates aligning reported amounts with statutory accounts and capital standards (paras 11–14); and the submitter must be authorised by an officer of the insurer (para 15).
This Reporting Standard sets out requirements for the provision of information to APRA relating to a private health insurer’s asset risk charge.
It includes associated specific instructions and must be read in conjunction with Prudential Standard HPS 114 Capital Adequacy: Asset Risk Charge (HPS 114).
Authority
This Reporting Standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001.
Purpose
The information reported to APRA under this Reporting Standard is used by APRA for the purpose of prudential supervision including assessing compliance with capital standards.
Application and commencement
This Reporting Standard applies to all private health insurers. This Reporting Standard applies for reporting periods ending on or after 1 July 2023.
Information required
A private health insurer must provide APRA with the information required by this Reporting Standard for each reporting period.
Method of submission
The information required by this Reporting Standard must be given to APRA:
(a) in electronic format using an electronic method available on APRA’s website; or
(b) by a method notified by APRA prior to submission.
Reporting periods and due dates
Subject to paragraph 7, a private health insurer must provide the information required by this Reporting Standard:
(a) in respect of each calendar quarter (i.e. the periods ending 30 September, 31 December, 31 March and 30 June); and
(b) in respect of each year ending 30 June.
If, having regard to the particular circumstances of a private health insurer, APRA considers it necessary or desirable to obtain information more or less frequently than as provided by subparagraph 6(a) or 6(b), APRA may, by notice in writing, change the reporting periods, or specify reporting periods, for the particular private health insurer.
The information required by this Reporting Standard must be provided to APRA:
(a) in the case of quarterly information, within 28 calendar days after the end of the reporting period to which the information relates;
(b) in the case of annual information, by 30 September each year; or
(c) in the case of information provided in accordance with paragraph 7, within the time specified by notice in writing.
APRA may, in writing, grant a private health insurer an extension of a due date, in which case the new due date will be the date on the notice of extension.
Note: For the avoidance of doubt, if the due date for a particular reporting period falls on a day other than a usual business day, a private health insurer is nonetheless required to submit the information required no later than the due date.
Quality control
All information provided by a private health insurer under this Reporting Standard must be subject to systems, processes and controls developed by the private health insurer for the internal review and authorisation of that information. It is the responsibility of the Board and senior management of the private health insurer to ensure that an appropriate set of policies and procedures for the authorisation of information submitted to APRA is in place.
Annual audit requirements
The information submitted for the purposes of paragraph 8(b) is to be subject to external audit to ensure consistency with the private health insurer’s statutory financial accounts and faithful application of the capital standards.
Audit certification and opinion must be provided to APRA by 30 September each year.
If a private health insurer received a qualified auditor’s report for a health benefits fund, the general fund, or the private health insurer for the year previous to the year for which the report is provided, the report for the year for which the report is provided must state whether the auditor has examined the issues identified and is satisfied that the private health insurer has taken the appropriate steps to rectify the matters raised in the previous report.
The auditor’s report must:
(a) state details of the program adopted to carry out the audit; and
(b) include the name of, and be signed by, the auditor who takes responsibility for the accuracy of the report.
Authorisation
A person who submits the information required under this Reporting Standard must be suitably authorised by an officer of the private health insurer.
Variations
APRA may, in writing, vary the reporting requirements of this Reporting Standard in relation to a private health insurer.
Interpretation
In this Reporting Standard:
(a) unless the contrary intention appears, words and expressions have the meanings given to them in Prudential Standard HPS 001 Definitions (HPS 001); and
(b) the following definitions are applicable:
AASB references relate to the Australian Accounting Standards made by the Australian Accounting Standards Board;
APRA means the Australian Prudential Regulation Authority established under the Australian Prudential Regulation Authority Act 1998;
capital standards means the prudential standards which relate to capital adequacy as defined in HPS 001;
officer has the same meaning as in the Act;
private health insurer has the same meaning as in the Act; and
reporting period means a period mentioned in paragraph 6 or, if applicable, paragraph 7; and
the Act means the Private Health Insurance (Prudential Supervision) Act 2015.
18. Unless the contrary intention appears, a reference to an Act, Prudential Standard, Reporting Standard, Australian Accounting or Auditing Standard is a reference to the instrument as in force from time to time.
This Reporting Standard sets out requirements for the provision of information to APRA relating to a private health insurer’s asset risk charge.
It includes associated specific instructions and must be read in conjunction with Prudential Standard HPS 114 Capital Adequacy: Asset Risk Charge (HPS 114).
Authority
This Reporting Standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001.
Purpose
The information reported to APRA under this Reporting Standard is used by APRA for the purpose of prudential supervision including assessing compliance with capital standards.
Application and commencement
This Reporting Standard applies to all private health insurers. This Reporting Standard applies for reporting periods ending on or after 1 July 2023.
Information required
A private health insurer must provide APRA with the information required by this Reporting Standard for each reporting period.
Method of submission
The information required by this Reporting Standard must be given to APRA:
(a) in electronic format using an electronic method available on APRA’s website; or
(b) by a method notified by APRA prior to submission.
Reporting periods and due dates
Subject to paragraph 7, a private health insurer must provide the information required by this Reporting Standard:
(a) in respect of each calendar quarter (i.e. the periods ending 30 September, 31 December, 31 March and 30 June); and
(b) in respect of each year ending 30 June.
If, having regard to the particular circumstances of a private health insurer, APRA considers it necessary or desirable to obtain information more or less frequently than as provided by subparagraph 6(a) or 6(b), APRA may, by notice in writing, change the reporting periods, or specify reporting periods, for the particular private health insurer.
The information required by this Reporting Standard must be provided to APRA:
(a) in the case of quarterly information, within 28 calendar days after the end of the reporting period to which the information relates;
(b) in the case of annual information, by 30 September each year; or
(c) in the case of information provided in accordance with paragraph 7, within the time specified by notice in writing.
APRA may, in writing, grant a private health insurer an extension of a due date, in which case the new due date will be the date on the notice of extension.
Note: For the avoidance of doubt, if the due date for a particular reporting period falls on a day other than a usual business day, a private health insurer is nonetheless required to submit the information required no later than the due date.
Quality control
All information provided by a private health insurer under this Reporting Standard must be subject to systems, processes and controls developed by the private health insurer for the internal review and authorisation of that information. It is the responsibility of the Board and senior management of the private health insurer to ensure that an appropriate set of policies and procedures for the authorisation of information submitted to APRA is in place.
Annual audit requirements
The information submitted for the purposes of paragraph 8(b) is to be subject to external audit to ensure consistency with the private health insurer’s statutory financial accounts and faithful application of the capital standards.
Audit certification and opinion must be provided to APRA by 30 September each year.
If a private health insurer received a qualified auditor’s report for a health benefits fund, the general fund, or the private health insurer for the year previous to the year for which the report is provided, the report for the year for which the report is provided must state whether the auditor has examined the issues identified and is satisfied that the private health insurer has taken the appropriate steps to rectify the matters raised in the previous report.
The auditor’s report must:
(a) state details of the program adopted to carry out the audit; and
(b) include the name of, and be signed by, the auditor who takes responsibility for the accuracy of the report.
Authorisation
A person who submits the information required under this Reporting Standard must be suitably authorised by an officer of the private health insurer.
Variations
APRA may, in writing, vary the reporting requirements of this Reporting Standard in relation to a private health insurer.
Interpretation
In this Reporting Standard:
(a) unless the contrary intention appears, words and expressions have the meanings given to them in Prudential Standard HPS 001 Definitions (HPS 001); and
(b) the following definitions are applicable:
AASB references relate to the Australian Accounting Standards made by the Australian Accounting Standards Board;
APRA means the Australian Prudential Regulation Authority established under the Australian Prudential Regulation Authority Act 1998;
capital standards means the prudential standards which relate to capital adequacy as defined in HPS 001;
officer has the same meaning as in the Act;
private health insurer has the same meaning as in the Act; and
reporting period means a period mentioned in paragraph 6 or, if applicable, paragraph 7; and
the Act means the Private Health Insurance (Prudential Supervision) Act 2015.
18. Unless the contrary intention appears, a reference to an Act, Prudential Standard, Reporting Standard, Australian Accounting or Auditing Standard is a reference to the instrument as in force from time to time.
Objective of this Reporting Standard
Objective of this Reporting Standard
Objective of this Reporting Standard
This Reporting Standard sets out requirements for the provision of information to APRA relating to a private health insurer’s asset risk charge.
It includes associated specific instructions and must be read in conjunction with Prudential Standard HPS 114 Capital Adequacy: Asset Risk Charge (HPS 114).
Authority
Authority
Authority
This Reporting Standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001.
Purpose
Purpose
Purpose
The information reported to APRA under this Reporting Standard is used by APRA for the purpose of prudential supervision including assessing compliance with capital standards.
Application and commencement
Application and commencement
Application and commencement
This Reporting Standard applies to all private health insurers. This Reporting Standard applies for reporting periods ending on or after 1 July 2023.
Information required
Information required
Information required
A private health insurer must provide APRA with the information required by this Reporting Standard for each reporting period.
Method of submission
Method of submission
Method of submission
The information required by this Reporting Standard must be given to APRA:
(a) in electronic format using an electronic method available on APRA’s website; or
(b) by a method notified by APRA prior to submission.
Reporting periods and due dates
Reporting periods and due dates
Reporting periods and due dates
Subject to paragraph 7, a private health insurer must provide the information required by this Reporting Standard:
(a) in respect of each calendar quarter (i.e. the periods ending 30 September, 31 December, 31 March and 30 June); and
(b) in respect of each year ending 30 June.
If, having regard to the particular circumstances of a private health insurer, APRA considers it necessary or desirable to obtain information more or less frequently than as provided by subparagraph 6(a) or 6(b), APRA may, by notice in writing, change the reporting periods, or specify reporting periods, for the particular private health insurer.
The information required by this Reporting Standard must be provided to APRA:
(a) in the case of quarterly information, within 28 calendar days after the end of the reporting period to which the information relates;
(b) in the case of annual information, by 30 September each year; or
(c) in the case of information provided in accordance with paragraph 7, within the time specified by notice in writing.
APRA may, in writing, grant a private health insurer an extension of a due date, in which case the new due date will be the date on the notice of extension.
Note: For the avoidance of doubt, if the due date for a particular reporting period falls on a day other than a usual business day, a private health insurer is nonetheless required to submit the information required no later than the due date.
Quality control
Quality control
Quality control
All information provided by a private health insurer under this Reporting Standard must be subject to systems, processes and controls developed by the private health insurer for the internal review and authorisation of that information. It is the responsibility of the Board and senior management of the private health insurer to ensure that an appropriate set of policies and procedures for the authorisation of information submitted to APRA is in place.
Annual audit requirements
Annual audit requirements
Annual audit requirements
The information submitted for the purposes of paragraph 8(b) is to be subject to external audit to ensure consistency with the private health insurer’s statutory financial accounts and faithful application of the capital standards.
Audit certification and opinion must be provided to APRA by 30 September each year.
If a private health insurer received a qualified auditor’s report for a health benefits fund, the general fund, or the private health insurer for the year previous to the year for which the report is provided, the report for the year for which the report is provided must state whether the auditor has examined the issues identified and is satisfied that the private health insurer has taken the appropriate steps to rectify the matters raised in the previous report.
The auditor’s report must:
(a) state details of the program adopted to carry out the audit; and
(b) include the name of, and be signed by, the auditor who takes responsibility for the accuracy of the report.
Authorisation
Authorisation
Authorisation
A person who submits the information required under this Reporting Standard must be suitably authorised by an officer of the private health insurer.
Variations
Variations
Variations
APRA may, in writing, vary the reporting requirements of this Reporting Standard in relation to a private health insurer.
Interpretation
Interpretation
Interpretation
In this Reporting Standard:
(a) unless the contrary intention appears, words and expressions have the meanings given to them in Prudential Standard HPS 001 Definitions (HPS 001); and
(b) the following definitions are applicable:
AASB references relate to the Australian Accounting Standards made by the Australian Accounting Standards Board;
APRA means the Australian Prudential Regulation Authority established under the Australian Prudential Regulation Authority Act 1998;
capital standards means the prudential standards which relate to capital adequacy as defined in HPS 001;
officer has the same meaning as in the Act;
private health insurer has the same meaning as in the Act; and
reporting period means a period mentioned in paragraph 6 or, if applicable, paragraph 7; and
the Act means the Private Health Insurance (Prudential Supervision) Act 2015.
18. Unless the contrary intention appears, a reference to an Act, Prudential Standard, Reporting Standard, Australian Accounting or Auditing Standard is a reference to the instrument as in force from time to time.
General instructions
General instructions
Reporting Standard HRS 114.0
Asset Risk Charge
General instructions
Reporting tables
Tables described in this reporting standard list each of the data fields required to be reported. The data fields are listed sequentially in the column order that they will appear in the reported data set. Constraints on the data that can be reported for each field have also been provided.
Any specific combination of values in a table must not appear on more than one row in that table when reported.
Look-through treatment
For asset and liability items that have been treated on a look-through basis for the purpose of Prudential Standard HPS 114 Capital Adequacy: Asset Risk Charge (HPS 114), report the effective underlying exposures after adjustments for look-through as well as their resultant impacts on capital base respectively.
Derivative treatment
All items should be reported gross of impacts from derivatives. Report the fair value of open derivative positions under derivatives (liabilities) and derivatives (assets).
Assets subject to stress
Exclude from the calculation of Asset Risk Charge all components of assets that are either:
deducted from total assets for the purpose of determining the capital base; or
subject to the Asset Concentration Risk Charge.
Include investment income receivable with the asset that generated the income.
Asset stress scenario
Private health insurers are not required to report the components of impact on the fund’s capital base for asset stress scenarios where it is determined that those scenarios would improve the capital base (i.e. result in a zero-risk charge component) as at the end of the relevant reporting period.
Private health insurers must report all asset stress scenarios that would give rise to a positive risk charge component.
Definitions
Terms highlighted in bold italics indicate that the definition is provided in these instructions.
A
Adjusted pre-stress amount
This is the value of relevant items of the health benefits fund or general fund. Report amounts before the application of any designated asset stresses, net of the effect of any look-through adjustments and applying the fair value requirement outlined in Prudential Standard HPS 112 Capital Adequacy: Measurement of Capital (HPS 112) and HPS 114.
Aggregated risk charge component
This is the aggregated result of applying the aggregation formula set out in HPS 114 to the capital base for each risk charge component. The formula allows for the likelihood of the asset risk stress scenarios occurring simultaneously.
Amounts payable on reinsurance contracts held(Items subject to Asset Risk Charge type)
This is the value of amounts payable on reinsurance contracts held. This includes reinsurance premiums that are due to be paid, all unpaid instalment reinsurance premiums, reinsurer’s portion of recoveries, and commissions due to reinsurers. This also includes deposits withheld from reinsurers.For reinsurance contracts held, if there is a legal right of set-off within the underlying reinsurance contracts, report the amount after set-off against other amounts receivable from the reinsurer under that reinsurance contract. If the amount is a net receivable position from the reinsurer, report the amount under amounts receivable on reinsurance contracts held. If there is not a legal right of set-off, report the amount payable without set-off. Also refer to the definition of amounts receivable on reinsurance contracts held.Amounts payable on reinsurance contracts held is netted against reinsurance contract assets or added to reinsurance contract liabilities under AASB 17.This must exclude any amount already allowed in insurance liabilities determined under Prudential Standard HPS 340 Insurance Liability Valuation (HPS 340) to avoid double counting.This amount must be consistent with amounts payable on reinsurance contracts held reported in Reporting Standard HRS 112.0 Determination of Capital Base (HRS 112.0).
Amounts receivable on reinsurance contracts held(Items subject to Asset Risk Charge type)
This is the value of amounts receivable on reinsurance contracts held. This includes reinsurance recoverables on paid claims.For reinsurance contracts held, if there is a legal right of set-off within the underlying reinsurance contracts, report the amount after set-off against other amounts payable to the reinsurer under that reinsurance contract. If the amount is a net payable position to the reinsurer, report the amount under amounts payable on reinsurance contracts held. If there is not a legal right of set-off, report the receivable amount without set-off. Also refer to the definition of amounts payable on reinsurance contracts held.Amounts receivable on reinsurance contracts held is netted against reinsurance contract liabilities or added to reinsurance contract assets under AASB 17.This must exclude any amount already allowed in insurance liabilities determined under HPS 340 to avoid double counting.This amount must be consistent with amounts receivable on reinsurance contracts held reported in HRS 112.0.
Assets subject to credit spreads stress type
This is the category of assets subject to credit spreads stress. The options are:bonds and other non-securitised assets;structured and securitised assets; andre-securitised assets.
C
Cash and cash equivalents(Items subject to Asset Risk Charge type)
This is the value, as at the relevant date, of notes and coins; deposits withdrawable or redeemable within 24 hours; and securities purchased under agreements to resell.
Claims payable(Items subject to Asset Risk Charge type)
This is the value of claims payable, which reflects claims due but not paid.For inwards reinsurance business, where there is a legal right of set-off within the underlying reinsurance contract, report under this item if the amount after set-off results in a net payable position to the cedant. If there is not a legal right of set-off, report the amount payable without set-off. Also refer to the definition of premiums receivable.Claims payable is netted against insurance contract assets or added to insurance contract liabilities under AASB 17.This must exclude any amount already allowed in insurance liabilities determined under HPS 340 to avoid double counting.This amount must be consistent with claims payable reported in HRS 112.0.
Counterparty grade
This is the classification applied to an investment or exposure as per the requirements of HPS 001. Assets guaranteed by an Australian state or territory government must be reported in the counterparty grade that applies after rating up one grade in accordance with HPS 114.
Credit spread fair value amount
This is the fair value of assets that are subject to credit spreads stress.
Credit spread stressed amount
This is the stressed value of assets that are subject to credit spreads stress.
Credit spreads stress(Stress scenario type)
This is the impact on the health benefits fund’s or general fund's capital base of an increase in credit spreads and the risk of default and is calculated in accordance with HPS 114.This stress applies to interest bearing assets, including cash deposits and floating rate assets. Credit derivatives and zero-coupon instruments such as bank bills must also be included.
Currency downwards stress(Stress scenario type)
This is the impact on the fund’s capital base of downward changes in foreign currency exchange rates and is calculated in accordance with HPS 114.
Currency upwards stress(Stress scenario type)
This is the impact on the health benefits fund’s or general fund's capital base of upward changes in foreign currency exchange rates and is calculated in accordance with HPS 114.
Current tax assets(Items subject to Asset Risk Charge type)
This is the value of current tax assets determined in accordance with Australian Accounting Standards.
D
Default stress(Stress scenario type)
This is the impact on the health benefits fund’s or general fund's capital base of the risk of counterparty default and is calculated in accordance with HPS 114. It applies to reinsurance assets, over the counter derivatives, unpaid premiums and all other credit or counterparty exposures that have not been affected by the credit spreads stress. In accordance with HPS 114, only the central estimates of reinsurance assets are to be subject to default stress.
Deferred tax assets(Items subject to Asset Risk Charge type)
This is the value of tax benefits that may be recognised in future financial periods, as consistent with the asset risk scenario under consideration.
Deferred tax liabilities(Items subject to Asset Risk Charge type)
This is the value of taxes payable in future periods in respect of taxable temporary differences. The definition is interpreted consistently with Australian Accounting Standard AASB 112 - Income Taxes (AASB 112).
Derivatives (assets)(Items subject to Asset Risk Charge type)
This is the value of all open derivative positions reported as assets.
Derivatives (liabilities)(Items subject to Asset Risk Charge type)
This is the value of all open derivatives positions reported as liabilities.
Dividend yield used in determination of equity stress(Yields used in stress scenarios type)
This is the dividend yield of the ASX 200 index used in determining the reduction in equity asset values under the equity stress scenario.
E
Earnings yield used in determination of property stress(Yields used in stress scenarios type)
This is the average earnings yield before taxes used in determining the reduction in infrastructure asset values under the property stress scenario.
Equities (direct)(Items subject to Asset Risk Charge type)
This is the value, as at the relevant date, of equity securities and of subordinated debt securities. Equity securities are, as defined by the Australian Accounting Standards, contracts that evidence a residual interest in the assets of an entity after deducting all its liabilities. This includes equity securities lent or sold by the entity under repurchase agreements, where the transaction does not result in the transfer of the rights of ownership of the securities away from the entity to another party. Subordinated debt is a debt security where the claim to repayment ranks lower in priority to other claims.
Equity stress(Stress scenario type)
This is the impact on the health benefits fund’s or general fund's capital base of a fall in equity and other asset values and is calculated in accordance with HPS 114.This stress applies to both listed and unlisted equity assets and to any other assets that are not considered in any of the other asset risk stresses. This stress also includes an increase to equity volatility.
Expected inflation stress measures the impact on the health benefits fund’s or general fund's capital base of changes to expected Consumer Price Index inflation rates. It also affects nominal interest rates.This item reports the impact on the capital base of the health benefits fund or general fund arising from the application of the downward expected inflation stress and is calculated in accordance with HPS 114.
Expected inflation stress measures the impact on the health benefits fund’s or general fund's capital base of changes to expected Consumer Price Index inflation rates. It also affects nominal interest rates.This item reports the impact on the capital base of the health benefits fund or general fund arising from the application of the upward expected inflation stress and is calculated in accordance with HPS 114.
Expected reinsurance recoveries(Items subject to Asset Risk Charge type)
This is the amount due to the health benefits fund or general fund from a reinsurer that arises from the recognition of premiums liabilities referred to in the PHI Prudential Standards (including HPS 340). This is distinguished from reinsurance recoverables.
G
General fund(Private health insurer fund type)
General fund has the same meaning as in HPS 001.
H
Health benefits fund(Private health insurer fund type)
Health benefits fund has the same meaning as in the Act.
This is the value of the risk equalisation transfers determined in accordance with HPS 340.
I
Impact of diversification
This is calculated as the sum of the risk charge components used in calculating the aggregated risk charge component, less the aggregated risk charge component as set out in HPS 114.
Impact on the fund’s capital base
This shows the impact on the capital base of each asset risk stress scenario as set out in HPS 114.This item is calculated for each stress scenario type as the sum of:cash and cash equivalents;current tax assets;interest rate investments (direct);equities (direct);property (direct);loans (direct);indirect investments;deferred tax assets;derivatives (assets);investments in related entities (associates, joint ventures, subsidiaries);other assets subject to Asset Risk Charge;deferred tax liabilities;derivatives (liabilities);other liabilities subject to Asset Risk Charge;reinsurance recoverables on outstanding claims;expected reinsurance recoveries;amounts receivable on reinsurance contracts held;other reinsurance assets;HPS 340 outstanding claims liabilities;HPS 340 premium liabilities;HPS 340 risk equalisation transfers;HPS 340 other insurance liabilities;HPS 340 deferred claims liability;premiums receivable;non-reinsurance recoveries receivable;other accounts receivable on insurance contracts issued;claims payable;amounts payable on reinsurance contracts held;other accounts payable on insurance contracts issued; andoff-balance sheet exposures.
Indirect investments(Items subject to Asset Risk Charge type)
This is the value of the net assets of unit trusts or managed investment schemes invested in by the health benefits fund or general fund, or mandates individually managed on behalf of the health benefits fund or general fund.
Interest rate investments (direct)(Items subject to Asset Risk Charge type)
This is the value of debt securities held by the health benefits fund or general fund as at the relevant date, plus the value of deposits and placements that have been classified by the private health insurer as assets backing insurance liabilities for statutory reporting purposes. A debt security is a transferable instrument evidencing a relationship of indebtedness. It is characterised by having a definable return that is not based on the economic performance of the issuing entity.
Investments in related entities (associates, joint ventures, subsidiaries)(Items subject to Asset Risk Charge type)
This is the value of strategic investments or acquisitions of the health benefits fund or general fund.This includes investments in associates, joint ventures and subsidiaries from the AASB 17 Insurance Contracts (AASB 17) balance sheet.This does not include investments that constitute assets backing private health insurance liabilities.
L
Loans (direct)(Items subject to Asset Risk Charge type)
This is the value of loans (direct). Loans (direct) includes financial leases and mortgages, and are typically non-negotiable on the secondary market.
N
Non-reinsurance recoveries receivable(Items subject to Asset Risk Charge type)
This is the value of non-reinsurance recoveries on paid claims.Non-reinsurance recoveries receivable is netted against insurance contract liabilities or added to insurance contract assets under AASB 17.This must exclude any amount already allowed in insurance liabilities determined under HPS 340 to avoid double counting.This amount must be consistent with non-reinsurance recoveries receivable reported in HRS 112.0.
O
Off-balance sheet exposures(Items subject to Asset Risk Charge type)
This is the value of off-balance sheet exposures that are subject to the Asset Risk Charge.
Other accounts payable on insurance contracts issued(Items subject to Asset Risk Charge type)
Other accounts payable on insurance contracts issued reflects any other amounts due but not paid relating to insurance contracts. This may include (but is not limited to) levies, taxes, rebates, fees and commissions.Other accounts payable on insurance contracts issued is netted against insurance contract assets or added to insurance contract liabilities under AASB 17.This must exclude any amount already allowed in insurance liabilities determined under HPS 340 to avoid double counting.This amount must be consistent with other accounts payable on insurance contracts issued reported in HRS 112.0.
Other accounts receivable on insurance contracts issued(Items subject to Asset Risk Charge type)
Other accounts receivable on insurance contracts issued reflects any other amounts due but not received relating to insurance contracts. This may include (but is not limited to) levies, taxes, rebates, fees and commissions.Other accounts receivable on insurance contracts issued is netted against insurance contract liabilities or added to insurance contract assets under AASB 17.This must exclude any amount already allowed in insurance liabilities determined under HPS 340 to avoid double counting.This amount must be consistent with other accounts receivable on insurance contracts issued reported in HRS 112.0.
Other assets subject to Asset Risk Charge(Items subject to Asset Risk Charge type)
This is the value of the accounting assets that have not been reported elsewhere in:cash and cash equivalents;current tax assets;deferred tax assets;derivatives (assets);investments in related entities (associates, joint ventures, subsidiaries);interest rate investments (direct);equities (direct);property (direct);loans (direct); orindirect investments.This does not include assets in excess of the concentration limits set out in Prudential Standard HPS 117 Capital Adequacy: Asset Concentration Risk Charge or assets which are deducted from capital base of the health benefits fund or general fund such as surplus in defined benefit superannuation funds of which the private health insurer is an employer-sponsor.Additionally, this excludes the following items from the AASB 17 balance sheet:insurance contract assets; andreinsurance contract assets.
Other liabilities subject to Asset Risk Charge(Items subject to Asset Risk Charge type)
This consists of all other accounting liabilities of the health benefits fund or general fund not separately reported under deferred tax liabilities or derivatives (liabilities).Additionally, this excludes the following items from the AASB 17 balance sheet:insurance contract liabilities; andreinsurance contract liabilities
Other reinsurance assets(Items subject to Asset Risk Charge type)
This is the value of the central estimate of any asset recognised by the health benefits fund or general fund that relates to reinsurance other than:reinsurance recoverables on outstanding claims;amounts receivable on reinsurance contracts held; andexpected reinsurance recoveries.
P
Premiums receivable(Items subject to Asset Risk Charge type)
This is the value of unpaid premiums in relation to direct insurance business and inwards reinsurance business. Unpaid premiums include premiums that are due to be received, unpaid premiums available for collection, and premiums not yet available for collection. Insurers must include all unpaid instalment premiums.This amount includes unpaid premiums in relation to unclosed business. Unclosed business refers to business written close to the balance date where acceptance of risk is prior to the balance date but there is insufficient information to accurately identify the business. This includes insurance policies that have not been processed, but for which a reporting insurer is liable at the valuation date.Premiums should be gross of reinsurance and commissions, before profit share rebates, and inclusive of stamp duty, policy fees, loadings and discounts.For inwards reinsurance business, if there is a legal right of set-off within the underlying reinsurance contract, report the amount after set-off against other amounts payable to the cedant under that reinsurance contract. If the amount is a net payable position to the cedant, report the amount under claims payable. If there is not a legal right of set-off, report the amount receivable without set-off. Also refer to the definition of claims payable.Premiums receivable is netted against insurance contract liabilities or added to insurance contact assets under AASB 17.Premiums receivable must be reduced by the amount that is likely to become uncollectable in the future.This amount must be consistent with premiums receivable reported in HRS 112.0.
Private health insurer fund type
This refers to either the health benefits fund or the general fund.
Property (direct)(Items subject to Asset Risk Charge type)
This is the value of property held by the health benefits fund or general fund, in accordance with the classification and measurement basis under the relevant Australian Accounting Standards.
Property stress(Stress scenario type)
This is the impact on the health benefits fund’s or general fund's capital base of changes in property and infrastructure asset values and is calculated in accordance with HPS 114.
R
Real interest rates downwards stress(Stress scenario type)
The real interest rates stress measures the impact on the fund’s capital base of downward changes in real interest rates. It also affects nominal interest rates.This item is calculated in accordance with HPS 114.
Real interest rates upwards stress(Stress scenario type)
The real interest rates stress measures the impact on the health benefits fund’s or general fund's capital base of upward changes in real interest rates. It also affects nominal interest rates.This item is calculated in accordance with HPS 114.
Reinsurance recoverables on outstanding claims(Items subject to Asset Risk Charge type)
This is the value of the central estimate of reinsurance recoverables in relation to reinsurance contracts for outstanding claims. This item does not include amounts that do not comprise an executed and legally binding reinsurance contract as per Prudential Standard HPS 112 Capital Adequacy: Measurement of Capital (HPS 112).
Rental yield used in determination of property stress(Yields used in stress scenarios type)
This is the average rental yield for the property assets, based on current leases, and net of expenses.
Risk charge component
This item is calculated for each stress scenario type as the greater of zero and the impact on the fund’s capital base amount.If the impact on the fund’s capital base is less than zero then the risk charge component is equal to the absolute value of the impact on the fund’s capital base.If the impact on the fund’s capital base is greater than zero then the risk charge component is zero.
S
Stress scenario amount
This the contribution of the relevant items towards the change in capital base under the stress scenario types.Specifications of the stresses are determined in accordance with HPS 114.
Stress scenario type
This consists of the stress scenarios that must be applied to individual items under HPS 114. The scenarios are:real interest rates upwards stress;real interest rates downwards stress;expected inflation upwards stress;expected inflation downwards stress;currency upwards stress;currency downwards stress;equity stress;property stress;credit spreads stress; anddefault stress.
Y
Yields used in stress scenarios percent
This is the percentage values of yields used in stress scenarios type.
Yields used in stress scenarios type
This consists of the types of yields used in stress scenarios that must be applied to individual items under HPS 114. The yield types are:dividend yield used in determination of equity stress;rental yield used in determination of property stress; andearnings yield used in determination of property stress.
Reporting tables
Reporting tables
Reporting tables
Tables described in this reporting standard list each of the data fields required to be reported. The data fields are listed sequentially in the column order that they will appear in the reported data set. Constraints on the data that can be reported for each field have also been provided.
Any specific combination of values in a table must not appear on more than one row in that table when reported.
Look-through treatment
Look-through treatment
Look-through treatment
For asset and liability items that have been treated on a look-through basis for the purpose of Prudential Standard HPS 114 Capital Adequacy: Asset Risk Charge (HPS 114), report the effective underlying exposures after adjustments for look-through as well as their resultant impacts on capital base respectively.
Derivative treatment
Derivative treatment
Derivative treatment
All items should be reported gross of impacts from derivatives. Report the fair value of open derivative positions under derivatives (liabilities) and derivatives (assets).
Assets subject to stress
Assets subject to stress
Assets subject to stress
Exclude from the calculation of Asset Risk Charge all components of assets that are either:
deducted from total assets for the purpose of determining the capital base; or
subject to the Asset Concentration Risk Charge.
Include investment income receivable with the asset that generated the income.
Asset stress scenario
Asset stress scenario
Asset stress scenario
Private health insurers are not required to report the components of impact on the fund’s capital base for asset stress scenarios where it is determined that those scenarios would improve the capital base (i.e. result in a zero-risk charge component) as at the end of the relevant reporting period.
Private health insurers must report all asset stress scenarios that would give rise to a positive risk charge component.
Definitions
Definitions
Definitions
Terms highlighted in bold italics indicate that the definition is provided in these instructions.
A
Adjusted pre-stress amount
This is the value of relevant items of the health benefits fund or general fund. Report amounts before the application of any designated asset stresses, net of the effect of any look-through adjustments and applying the fair value requirement outlined in Prudential Standard HPS 112 Capital Adequacy: Measurement of Capital (HPS 112) and HPS 114.
Aggregated risk charge component
This is the aggregated result of applying the aggregation formula set out in HPS 114 to the capital base for each risk charge component. The formula allows for the likelihood of the asset risk stress scenarios occurring simultaneously.
Amounts payable on reinsurance contracts held(Items subject to Asset Risk Charge type)
This is the value of amounts payable on reinsurance contracts held. This includes reinsurance premiums that are due to be paid, all unpaid instalment reinsurance premiums, reinsurer’s portion of recoveries, and commissions due to reinsurers. This also includes deposits withheld from reinsurers.For reinsurance contracts held, if there is a legal right of set-off within the underlying reinsurance contracts, report the amount after set-off against other amounts receivable from the reinsurer under that reinsurance contract. If the amount is a net receivable position from the reinsurer, report the amount under amounts receivable on reinsurance contracts held. If there is not a legal right of set-off, report the amount payable without set-off. Also refer to the definition of amounts receivable on reinsurance contracts held.Amounts payable on reinsurance contracts held is netted against reinsurance contract assets or added to reinsurance contract liabilities under AASB 17.This must exclude any amount already allowed in insurance liabilities determined under Prudential Standard HPS 340 Insurance Liability Valuation (HPS 340) to avoid double counting.This amount must be consistent with amounts payable on reinsurance contracts held reported in Reporting Standard HRS 112.0 Determination of Capital Base (HRS 112.0).
Amounts receivable on reinsurance contracts held(Items subject to Asset Risk Charge type)
This is the value of amounts receivable on reinsurance contracts held. This includes reinsurance recoverables on paid claims.For reinsurance contracts held, if there is a legal right of set-off within the underlying reinsurance contracts, report the amount after set-off against other amounts payable to the reinsurer under that reinsurance contract. If the amount is a net payable position to the reinsurer, report the amount under amounts payable on reinsurance contracts held. If there is not a legal right of set-off, report the receivable amount without set-off. Also refer to the definition of amounts payable on reinsurance contracts held.Amounts receivable on reinsurance contracts held is netted against reinsurance contract liabilities or added to reinsurance contract assets under AASB 17.This must exclude any amount already allowed in insurance liabilities determined under HPS 340 to avoid double counting.This amount must be consistent with amounts receivable on reinsurance contracts held reported in HRS 112.0.
Assets subject to credit spreads stress type
This is the category of assets subject to credit spreads stress. The options are:bonds and other non-securitised assets;structured and securitised assets; andre-securitised assets.
C
Cash and cash equivalents(Items subject to Asset Risk Charge type)
This is the value, as at the relevant date, of notes and coins; deposits withdrawable or redeemable within 24 hours; and securities purchased under agreements to resell.
Claims payable(Items subject to Asset Risk Charge type)
This is the value of claims payable, which reflects claims due but not paid.For inwards reinsurance business, where there is a legal right of set-off within the underlying reinsurance contract, report under this item if the amount after set-off results in a net payable position to the cedant. If there is not a legal right of set-off, report the amount payable without set-off. Also refer to the definition of premiums receivable.Claims payable is netted against insurance contract assets or added to insurance contract liabilities under AASB 17.This must exclude any amount already allowed in insurance liabilities determined under HPS 340 to avoid double counting.This amount must be consistent with claims payable reported in HRS 112.0.
Counterparty grade
This is the classification applied to an investment or exposure as per the requirements of HPS 001. Assets guaranteed by an Australian state or territory government must be reported in the counterparty grade that applies after rating up one grade in accordance with HPS 114.
Credit spread fair value amount
This is the fair value of assets that are subject to credit spreads stress.
Credit spread stressed amount
This is the stressed value of assets that are subject to credit spreads stress.
Credit spreads stress(Stress scenario type)
This is the impact on the health benefits fund’s or general fund's capital base of an increase in credit spreads and the risk of default and is calculated in accordance with HPS 114.This stress applies to interest bearing assets, including cash deposits and floating rate assets. Credit derivatives and zero-coupon instruments such as bank bills must also be included.
Currency downwards stress(Stress scenario type)
This is the impact on the fund’s capital base of downward changes in foreign currency exchange rates and is calculated in accordance with HPS 114.
Currency upwards stress(Stress scenario type)
This is the impact on the health benefits fund’s or general fund's capital base of upward changes in foreign currency exchange rates and is calculated in accordance with HPS 114.
Current tax assets(Items subject to Asset Risk Charge type)
This is the value of current tax assets determined in accordance with Australian Accounting Standards.
D
Default stress(Stress scenario type)
This is the impact on the health benefits fund’s or general fund's capital base of the risk of counterparty default and is calculated in accordance with HPS 114. It applies to reinsurance assets, over the counter derivatives, unpaid premiums and all other credit or counterparty exposures that have not been affected by the credit spreads stress. In accordance with HPS 114, only the central estimates of reinsurance assets are to be subject to default stress.
Deferred tax assets(Items subject to Asset Risk Charge type)
This is the value of tax benefits that may be recognised in future financial periods, as consistent with the asset risk scenario under consideration.
Deferred tax liabilities(Items subject to Asset Risk Charge type)
This is the value of taxes payable in future periods in respect of taxable temporary differences. The definition is interpreted consistently with Australian Accounting Standard AASB 112 - Income Taxes (AASB 112).
Derivatives (assets)(Items subject to Asset Risk Charge type)
This is the value of all open derivative positions reported as assets.
Derivatives (liabilities)(Items subject to Asset Risk Charge type)
This is the value of all open derivatives positions reported as liabilities.
Dividend yield used in determination of equity stress(Yields used in stress scenarios type)
This is the dividend yield of the ASX 200 index used in determining the reduction in equity asset values under the equity stress scenario.
E
Earnings yield used in determination of property stress(Yields used in stress scenarios type)
This is the average earnings yield before taxes used in determining the reduction in infrastructure asset values under the property stress scenario.
Equities (direct)(Items subject to Asset Risk Charge type)
This is the value, as at the relevant date, of equity securities and of subordinated debt securities. Equity securities are, as defined by the Australian Accounting Standards, contracts that evidence a residual interest in the assets of an entity after deducting all its liabilities. This includes equity securities lent or sold by the entity under repurchase agreements, where the transaction does not result in the transfer of the rights of ownership of the securities away from the entity to another party. Subordinated debt is a debt security where the claim to repayment ranks lower in priority to other claims.
Equity stress(Stress scenario type)
This is the impact on the health benefits fund’s or general fund's capital base of a fall in equity and other asset values and is calculated in accordance with HPS 114.This stress applies to both listed and unlisted equity assets and to any other assets that are not considered in any of the other asset risk stresses. This stress also includes an increase to equity volatility.
Expected inflation stress measures the impact on the health benefits fund’s or general fund's capital base of changes to expected Consumer Price Index inflation rates. It also affects nominal interest rates.This item reports the impact on the capital base of the health benefits fund or general fund arising from the application of the downward expected inflation stress and is calculated in accordance with HPS 114.
Expected inflation stress measures the impact on the health benefits fund’s or general fund's capital base of changes to expected Consumer Price Index inflation rates. It also affects nominal interest rates.This item reports the impact on the capital base of the health benefits fund or general fund arising from the application of the upward expected inflation stress and is calculated in accordance with HPS 114.
Expected reinsurance recoveries(Items subject to Asset Risk Charge type)
This is the amount due to the health benefits fund or general fund from a reinsurer that arises from the recognition of premiums liabilities referred to in the PHI Prudential Standards (including HPS 340). This is distinguished from reinsurance recoverables.
G
General fund(Private health insurer fund type)
General fund has the same meaning as in HPS 001.
H
Health benefits fund(Private health insurer fund type)
Health benefits fund has the same meaning as in the Act.
This is the value of the risk equalisation transfers determined in accordance with HPS 340.
I
Impact of diversification
This is calculated as the sum of the risk charge components used in calculating the aggregated risk charge component, less the aggregated risk charge component as set out in HPS 114.
Impact on the fund’s capital base
This shows the impact on the capital base of each asset risk stress scenario as set out in HPS 114.This item is calculated for each stress scenario type as the sum of:cash and cash equivalents;current tax assets;interest rate investments (direct);equities (direct);property (direct);loans (direct);indirect investments;deferred tax assets;derivatives (assets);investments in related entities (associates, joint ventures, subsidiaries);other assets subject to Asset Risk Charge;deferred tax liabilities;derivatives (liabilities);other liabilities subject to Asset Risk Charge;reinsurance recoverables on outstanding claims;expected reinsurance recoveries;amounts receivable on reinsurance contracts held;other reinsurance assets;HPS 340 outstanding claims liabilities;HPS 340 premium liabilities;HPS 340 risk equalisation transfers;HPS 340 other insurance liabilities;HPS 340 deferred claims liability;premiums receivable;non-reinsurance recoveries receivable;other accounts receivable on insurance contracts issued;claims payable;amounts payable on reinsurance contracts held;other accounts payable on insurance contracts issued; andoff-balance sheet exposures.
Indirect investments(Items subject to Asset Risk Charge type)
This is the value of the net assets of unit trusts or managed investment schemes invested in by the health benefits fund or general fund, or mandates individually managed on behalf of the health benefits fund or general fund.
Interest rate investments (direct)(Items subject to Asset Risk Charge type)
This is the value of debt securities held by the health benefits fund or general fund as at the relevant date, plus the value of deposits and placements that have been classified by the private health insurer as assets backing insurance liabilities for statutory reporting purposes. A debt security is a transferable instrument evidencing a relationship of indebtedness. It is characterised by having a definable return that is not based on the economic performance of the issuing entity.
Investments in related entities (associates, joint ventures, subsidiaries)(Items subject to Asset Risk Charge type)
This is the value of strategic investments or acquisitions of the health benefits fund or general fund.This includes investments in associates, joint ventures and subsidiaries from the AASB 17 Insurance Contracts (AASB 17) balance sheet.This does not include investments that constitute assets backing private health insurance liabilities.
L
Loans (direct)(Items subject to Asset Risk Charge type)
This is the value of loans (direct). Loans (direct) includes financial leases and mortgages, and are typically non-negotiable on the secondary market.
N
Non-reinsurance recoveries receivable(Items subject to Asset Risk Charge type)
This is the value of non-reinsurance recoveries on paid claims.Non-reinsurance recoveries receivable is netted against insurance contract liabilities or added to insurance contract assets under AASB 17.This must exclude any amount already allowed in insurance liabilities determined under HPS 340 to avoid double counting.This amount must be consistent with non-reinsurance recoveries receivable reported in HRS 112.0.
O
Off-balance sheet exposures(Items subject to Asset Risk Charge type)
This is the value of off-balance sheet exposures that are subject to the Asset Risk Charge.
Other accounts payable on insurance contracts issued(Items subject to Asset Risk Charge type)
Other accounts payable on insurance contracts issued reflects any other amounts due but not paid relating to insurance contracts. This may include (but is not limited to) levies, taxes, rebates, fees and commissions.Other accounts payable on insurance contracts issued is netted against insurance contract assets or added to insurance contract liabilities under AASB 17.This must exclude any amount already allowed in insurance liabilities determined under HPS 340 to avoid double counting.This amount must be consistent with other accounts payable on insurance contracts issued reported in HRS 112.0.
Other accounts receivable on insurance contracts issued(Items subject to Asset Risk Charge type)
Other accounts receivable on insurance contracts issued reflects any other amounts due but not received relating to insurance contracts. This may include (but is not limited to) levies, taxes, rebates, fees and commissions.Other accounts receivable on insurance contracts issued is netted against insurance contract liabilities or added to insurance contract assets under AASB 17.This must exclude any amount already allowed in insurance liabilities determined under HPS 340 to avoid double counting.This amount must be consistent with other accounts receivable on insurance contracts issued reported in HRS 112.0.
Other assets subject to Asset Risk Charge(Items subject to Asset Risk Charge type)
This is the value of the accounting assets that have not been reported elsewhere in:cash and cash equivalents;current tax assets;deferred tax assets;derivatives (assets);investments in related entities (associates, joint ventures, subsidiaries);interest rate investments (direct);equities (direct);property (direct);loans (direct); orindirect investments.This does not include assets in excess of the concentration limits set out in Prudential Standard HPS 117 Capital Adequacy: Asset Concentration Risk Charge or assets which are deducted from capital base of the health benefits fund or general fund such as surplus in defined benefit superannuation funds of which the private health insurer is an employer-sponsor.Additionally, this excludes the following items from the AASB 17 balance sheet:insurance contract assets; andreinsurance contract assets.
Other liabilities subject to Asset Risk Charge(Items subject to Asset Risk Charge type)
This consists of all other accounting liabilities of the health benefits fund or general fund not separately reported under deferred tax liabilities or derivatives (liabilities).Additionally, this excludes the following items from the AASB 17 balance sheet:insurance contract liabilities; andreinsurance contract liabilities
Other reinsurance assets(Items subject to Asset Risk Charge type)
This is the value of the central estimate of any asset recognised by the health benefits fund or general fund that relates to reinsurance other than:reinsurance recoverables on outstanding claims;amounts receivable on reinsurance contracts held; andexpected reinsurance recoveries.
P
Premiums receivable(Items subject to Asset Risk Charge type)
This is the value of unpaid premiums in relation to direct insurance business and inwards reinsurance business. Unpaid premiums include premiums that are due to be received, unpaid premiums available for collection, and premiums not yet available for collection. Insurers must include all unpaid instalment premiums.This amount includes unpaid premiums in relation to unclosed business. Unclosed business refers to business written close to the balance date where acceptance of risk is prior to the balance date but there is insufficient information to accurately identify the business. This includes insurance policies that have not been processed, but for which a reporting insurer is liable at the valuation date.Premiums should be gross of reinsurance and commissions, before profit share rebates, and inclusive of stamp duty, policy fees, loadings and discounts.For inwards reinsurance business, if there is a legal right of set-off within the underlying reinsurance contract, report the amount after set-off against other amounts payable to the cedant under that reinsurance contract. If the amount is a net payable position to the cedant, report the amount under claims payable. If there is not a legal right of set-off, report the amount receivable without set-off. Also refer to the definition of claims payable.Premiums receivable is netted against insurance contract liabilities or added to insurance contact assets under AASB 17.Premiums receivable must be reduced by the amount that is likely to become uncollectable in the future.This amount must be consistent with premiums receivable reported in HRS 112.0.
Private health insurer fund type
This refers to either the health benefits fund or the general fund.
Property (direct)(Items subject to Asset Risk Charge type)
This is the value of property held by the health benefits fund or general fund, in accordance with the classification and measurement basis under the relevant Australian Accounting Standards.
Property stress(Stress scenario type)
This is the impact on the health benefits fund’s or general fund's capital base of changes in property and infrastructure asset values and is calculated in accordance with HPS 114.
R
Real interest rates downwards stress(Stress scenario type)
The real interest rates stress measures the impact on the fund’s capital base of downward changes in real interest rates. It also affects nominal interest rates.This item is calculated in accordance with HPS 114.
Real interest rates upwards stress(Stress scenario type)
The real interest rates stress measures the impact on the health benefits fund’s or general fund's capital base of upward changes in real interest rates. It also affects nominal interest rates.This item is calculated in accordance with HPS 114.
Reinsurance recoverables on outstanding claims(Items subject to Asset Risk Charge type)
This is the value of the central estimate of reinsurance recoverables in relation to reinsurance contracts for outstanding claims. This item does not include amounts that do not comprise an executed and legally binding reinsurance contract as per Prudential Standard HPS 112 Capital Adequacy: Measurement of Capital (HPS 112).
Rental yield used in determination of property stress(Yields used in stress scenarios type)
This is the average rental yield for the property assets, based on current leases, and net of expenses.
Risk charge component
This item is calculated for each stress scenario type as the greater of zero and the impact on the fund’s capital base amount.If the impact on the fund’s capital base is less than zero then the risk charge component is equal to the absolute value of the impact on the fund’s capital base.If the impact on the fund’s capital base is greater than zero then the risk charge component is zero.
S
Stress scenario amount
This the contribution of the relevant items towards the change in capital base under the stress scenario types.Specifications of the stresses are determined in accordance with HPS 114.
Stress scenario type
This consists of the stress scenarios that must be applied to individual items under HPS 114. The scenarios are:real interest rates upwards stress;real interest rates downwards stress;expected inflation upwards stress;expected inflation downwards stress;currency upwards stress;currency downwards stress;equity stress;property stress;credit spreads stress; anddefault stress.
Y
Yields used in stress scenarios percent
This is the percentage values of yields used in stress scenarios type.
Yields used in stress scenarios type
This consists of the types of yields used in stress scenarios that must be applied to individual items under HPS 114. The yield types are:dividend yield used in determination of equity stress;rental yield used in determination of property stress; andearnings yield used in determination of property stress.
More sections below
Source text: opening excerpt
Sourced from the Federal Register of Legislation (legislation.gov.au), CC BY 4.0.
Reporting Standard HRS 114.0 Reporting Standard HRS 114.0
Reporting Standard HRS 114.0
Asset Risk Charge
Objective of this Reporting Standard
This Reporting Standard sets out requirements for the provision of information to APRA relating to a private health insurer’s asset risk charge.
It includes associated specific instructions and must be read in conjunction with Prudential Standard HPS 114 Capital Adequacy: Asset Risk Charge (HPS 114).
Authority
This Reporting Standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001.
Purpose
The information reported to APRA under this Reporting Standard is used by APRA for the purpose of prudential supervision including assessing compliance with capital standards.
Application and commencement
This Reporting Standard applies to all private health insurers. This Reporting Standard applies for reporting periods ending on or after 1 July 2023.
Information required
A private health insurer must provide APRA with the information required by this Reporting Standard for each reporting period.
Method of submission
The information required by this Reporting Standard must be given to APRA:
(a) in electronic format using an electronic method available on APRA’s website; or
(b) by a method notified by APRA prior to submission.
Reporting periods and due dates
Subject to paragraph 7, a private health insurer must provide the information required by this Reporting Standard:
(a) in respect of each calendar quarter (i.e. the periods ending 30 September, 31 December, 31 March and 30 June); and
(b) in respect of each year ending 30 June.
If, having regard to the particular circumstances of a private health insurer, APRA considers it necessary or desirable to obtain information more or less frequently than as provided by subparagraph 6(a) or 6(b), APRA may, by notice in writing, change the reporting periods, or specify reporting periods, for the particular private health insurer.
The information required by this Reporting Standard must be provided to APRA:
(a) in the case of quarterly information, within 28 calendar days after the end of the reporting period to which the information relates;
APRA retains operational discretion: it can vary reporting periods or frequency for a particular insurer and can vary reporting requirements in writing. APRA can also grant extensions. (paras 7, 9, 16)
Who this affects
Directly: All entities that meet the statutory definition of a private health insurer (the Act) — each insurer must report at the fund level (health benefits fund(s) and the general fund). (para 3; Table 1)
Indirectly: auditors engaged by those insurers (annual certification) and the APRA teams who consume and analyse the data.
Why it matters (purpose and practical effect)
APRA uses the submitted data for prudential supervision — principally to assess compliance with capital adequacy standards and to calculate or verify each insurer’s Asset Risk Charge. (para 2)
Mechanically, the standard makes the asset‑risk inputs (pre‑stress balances, stressed values by scenario, counterparty grading, and yield assumptions) auditable and standardised across the industry. That improves APRA’s comparability and oversight of insurers’ asset risks and capital positions.
Costs, incentives and trade‑offs (how it changes behaviour and who pays)
Who pays: private health insurers bear compliance costs — systems to extract and transform data, add look‑through calculations, apply stress scenarios, produce APRA XML/CSV submissions, and fund annual external audits. (paras 4–5; paras 10–14; Tables)
Who decides: APRA decides reporting format, timing and can vary requirements for individual insurers. This gives APRA operational flexibility but increases regulatory discretion for affected firms. (paras 5, 7, 16)
Behavioural incentives: by standardising stress‑scenario reporting and requiring auditable links to statutory accounts and capital rules (references to Prudential Standards HPS 114, HPS 112, HPS 340 and relevant AASB standards), the standard increases the salience of asset allocations, counterparty exposures and reinsurance structures in capital assessments. Insurers have an incentive to ensure asset classifications, counterparty grades, and look‑through allocations are conservative and well‑documented to avoid higher measured risk charges.
Compliance burden and implementation risk: significant operational work is needed to map AASB/HPS balance sheet items into the reporting fields, implement look‑through rules, and run stress calculations consistent with HPS 114. Smaller insurers or those with bespoke investments may face higher relative costs. Audit timing (auditor’s report by 30 September) adds a hard annual deadline. (paras 10–14; Tables 1–4)
Concentrated benefits, diffuse costs: the principal benefit (improved regulatory oversight and consistent capital measurement) accrues to the regulator and, indirectly, system stability. The direct cost burden falls on insurers and their auditors — concentrated among those with more complex asset books or limited reporting infrastructure.
Operational and legal details to note
Reporting frequency is standard quarterly + annual, but APRA can require more or less frequent reporting for particular insurers. (paras 6–7)
Insurers do not have to report asset stress components where a scenario would improve capital (i.e. result in zero risk charge) but must report any scenario producing a positive risk charge component. This reduces reporting volume for favourable scenarios but requires scenario‑by‑scenario checks. (Asset stress scenario)
The Reporting Standard cross‑references multiple prudential and accounting instruments (HPS 114, HPS 112, HPS 340, HPS 117, AASB 17, AASB 112). Compliance therefore requires reading those instruments together. (Interpretation: para 17–18; multiple references in definitions and table instructions)
Implementation risks and opportunities
Risk: misclassification, inconsistent look‑through application, or poor mapping between statutory accounts and reported fields could generate audit qualifications and regulator queries. (paras 10–14; Table instructions)
Opportunity: insurers investing in robust data pipelines and controls reduce audit friction going forward and can use the stress outputs for their own risk management and capital planning.
Bottom line (mechanical change vs stated purpose)
Mechanically, the instrument imposes a standardised, auditable reporting framework and timetable for all private health insurers to provide APRA with the inputs needed to calculate and supervise the Asset Risk Charge. The stated purpose is prudential supervision and assessing compliance with capital standards (para 2). The principal trade‑offs are increased regulatory transparency and supervisory comparability versus compliance and audit costs borne by insurers, plus APRA’s discretion to adjust reporting for individual firms (paras 7, 16).
(b) in the case of annual information, by 30 September each year; or
(c) in the case of information provided in accordance with paragraph 7, within the time specified by notice in writing.
APRA may, in writing, grant a private health insurer an extension of a due date, in which case the new due date will be the date on the notice of extension.
Note: For the avoidance of doubt, if the due date for a particular reporting period falls on a day other than a usual business day, a private health insurer is nonetheless required to submit the information required no later than the due date.
Quality control
All information provided by a private health insurer under this Reporting Standard must be subject to systems, processes and controls developed by the private health insurer for the internal review and authorisation of that information. It is the responsibility of the Board and senior management of the private health insurer to ensure that an appropriate set of policies and procedures for the authorisation of information submitted to APRA is in place.
Annual audit requirements
The information submitted for the purposes of paragraph 8(b) is to be subject to external audit to ensure consistency with the private health insurer’s statutory financial accounts and faithful application of the capital standards.
Audit certification and opinion must be provided to APRA by 30 September each year.
If a private health insurer received a qualified auditor’s report for a health benefits fund, the general fund, or the private health insurer for the year previous to the year for which the report is provided, the report for the year for which the report is provided must state whether the auditor has examined the issues identified and is satisfied that the private health insurer has taken the appropriate steps to rectify the matters raised in the previous report.
The auditor’s report must:
(a) state details of the program adopted to carry out the audit; and
(b) include the name of, and be signed by, the auditor who takes responsibility for the accuracy of the report.
Authorisation
A person who submits the information required under this Reporting Standard must be suitably authorised by an officer of the private health insurer.
Variations
APRA may, in writing, vary the reporting requirements of this Reporting Standard in relation to a private health insurer.
Interpretation
In this Reporting Standard:
(a) unless the contrary intention appears, words and expressions have the meanings given to them in Prudential Standard HPS 001 Definitions (HPS 001); and
(b) the following definitions are applicable:
AASB references relate to the Australian Accounting Standards made by the Australian Accounting Standards Board;
APRA means the Australian Prudential Regulation Authority established under the Australian Prudential Regulation Authority Act 1998;
capital standards means the prudential standards which relate to capital adequacy as defined in HPS 001;
officer has the same meaning as in the Act;
private health insurer has the same meaning as in the Act; and
reporting period means a period mentioned in paragraph 6 or, if applicable, paragraph 7; and
the Act means the Private Health Insurance (Prudential Supervision) Act 2015.
18. Unless the contrary intention appears, a reference to an Act, Prudential Standard, Reporting Standard, Australian Accounting or Auditing Standard is a reference to the instrument as in force from time to time.
Asset Risk Charge Asset Risk Charge
Reporting Standard HRS 114.0
Asset Risk Charge
Objective of this Reporting Standard
This Reporting Standard sets out requirements for the provision of information to APRA relating to a private health insurer’s asset risk charge.
It includes associated specific instructions and must be read in conjunction with Prudential Standard HPS 114 Capital Adequacy: Asset Risk Charge (HPS 114).
Authority
This Reporting Standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001.
Purpose
The information reported to APRA under this Reporting Standard is used by APRA for the purpose of prudential supervision including assessing compliance with capital standards.
Application and commencement
This Reporting Standard applies to all private health insurers. This Reporting Standard applies for reporting periods ending on or after 1 July 2023.
Information required
A private health insurer must provide APRA with the information required by this Reporting Standard for each reporting period.
Method of submission
The information required by this Reporting Standard must be given to APRA:
(a) in electronic format using an electronic method available on APRA’s website; or
(b) by a method notified by APRA prior to submission.
Reporting periods and due dates
Subject to paragraph 7, a private health insurer must provide the information required by this Reporting Standard:
(a) in respect of each calendar quarter (i.e. the periods ending 30 September, 31 December, 31 March and 30 June); and
(b) in respect of each year ending 30 June.
If, having regard to the particular circumstances of a private health insurer, APRA considers it necessary or desirable to obtain information more or less frequently than as provided by subparagraph 6(a) or 6(b), APRA may, by notice in writing, change the reporting periods, or specify reporting periods, for the particular private health insurer.
The information required by this Reporting Standard must be provided to APRA:
(a) in the case of quarterly information, within 28 calendar days after the end of the reporting period to which the information relates;
(b) in the case of annual information, by 30 September each year; or
(c) in the case of information provided in accordance with paragraph 7, within the time specified by notice in writing.
APRA may, in writing, grant a private health insurer an extension of a due date, in which case the new due date will be the date on the notice of extension.
Note: For the avoidance of doubt, if the due date for a particular reporting period falls on a day other than a usual business day, a private health insurer is nonetheless required to submit the information required no later than the due date.
Quality control
All information provided by a private health insurer under this Reporting Standard must be subject to systems, processes and controls developed by the private health insurer for the internal review and authorisation of that information. It is the responsibility of the Board and senior management of the private health insurer to ensure that an appropriate set of policies and procedures for the authorisation of information submitted to APRA is in place.
Annual audit requirements
The information submitted for the purposes of paragraph 8(b) is to be subject to external audit to ensure consistency with the private health insurer’s statutory financial accounts and faithful application of the capital standards.
Audit certification and opinion must be provided to APRA by 30 September each year.
If a private health insurer received a qualified auditor’s report for a health benefits fund, the general fund, or the private health insurer for the year previous to the year for which the report is provided, the report for the year for which the report is provided must state whether the auditor has examined the issues identified and is satisfied that the private health insurer has taken the appropriate steps to rectify the matters raised in the previous report.
The auditor’s report must:
(a) state details of the program adopted to carry out the audit; and
(b) include the name of, and be signed by, the auditor who takes responsibility for the accuracy of the report.
Authorisation
A person who submits the information required under this Reporting Standard must be suitably authorised by an officer of the private health insurer.
Variations
APRA may, in writing, vary the reporting requirements of this Reporting Standard in relation to a private health insurer.
Interpretation
In this Reporting Standard:
(a) unless the contrary intention appears, words and expressions have the meanings given to them in Prudential Standard HPS 001 Definitions (HPS 001); and
(b) the following definitions are applicable:
AASB references relate to the Australian Accounting Standards made by the Australian Accounting Standards Board;
APRA means the Australian Prudential Regulation Authority established under the Australian Prudential Regulation Authority Act 1998;
capital standards means the prudential standards which relate to capital adequacy as defined in HPS 001;
officer has the same meaning as in the Act;
private health insurer has the same meaning as in the Act; and
reporting period means a period mentioned in paragraph 6 or, if applicable, paragraph 7; and
the Act means the Private Health Insurance (Prudential Supervision) Act 2015.
18. Unless the contrary intention appears, a reference to an Act, Prudential Standard, Reporting Standard, Australian Accounting or Auditing Standard is a reference to the instrument as in force from time to time.
Objective of this Reporting Standard Objective of this Reporting Standard
Objective of this Reporting Standard
This Reporting Standard sets out requirements for the provision of information to APRA relating to a private health insurer’s asset risk charge.
It includes associated specific instructions and must be read in conjunction with Prudential Standard HPS 114 Capital Adequacy: Asset Risk Charge (HPS 114).
Authority Authority
Authority
This Reporting Standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001.
Purpose Purpose
Purpose
The information reported to APRA under this Reporting Standard is used by APRA for the purpose of prudential supervision including assessing compliance with capital standards.
Application and commencement Application and commencement
Application and commencement
This Reporting Standard applies to all private health insurers. This Reporting Standard applies for reporting periods ending on or after 1 July 2023.
Information required Information required
Information required
A private health insurer must provide APRA with the information required by this Reporting Standard for each reporting period.
Method of submission Method of submission
Method of submission
The information required by this Reporting Standard must be given to APRA:
(a) in electronic format using an electronic method available on APRA’s website; or
(b) by a method notified by APRA prior to submission.
Reporting periods and due dates Reporting periods and due dates
Reporting periods and due dates
Subject to paragraph 7, a private health insurer must provide the information required by this Reporting Standard:
(a) in respect of each calendar quarter (i.e. the periods ending 30 September, 31 December, 31 March and 30 June); and
(b) in respect of each year ending 30 June.
If, having regard to the particular circumstances of a private health insurer, APRA considers it necessary or desirable to obtain information more or less frequently than as provided by subparagraph 6(a) or 6(b), APRA may, by notice in writing, change the reporting periods, or specify reporting periods, for the particular private health insurer.
The information required by this Reporting Standard must be provided to APRA:
(a) in the case of quarterly information, within 28 calendar days after the end of the reporting period to which the information relates;
(b) in the case of annual information, by 30 September each year; or
(c) in the case of information provided in accordance with paragraph 7, within the time specified by notice in writing.
APRA may, in writing, grant a private health insurer an extension of a due date, in which case the new due date will be the date on the notice of extension.
Note: For the avoidance of doubt, if the due date for a particular reporting period falls on a day other than a usual business day, a private health insurer is nonetheless required to submit the information required no later than the due date.
Quality control Quality control
Quality control
All information provided by a private health insurer under this Reporting Standard must be subject to systems, processes and controls developed by the private health insurer for the internal review and authorisation of that information. It is the responsibility of the Board and senior management of the private health insurer to ensure that an appropriate set of policies and procedures for the authorisation of information submitted to APRA is in place.
The information submitted for the purposes of paragraph 8(b) is to be subject to external audit to ensure consistency with the private health insurer’s statutory financial accounts and faithful application of the capital standards.
Audit certification and opinion must be provided to APRA by 30 September each year.
If a private health insurer received a qualified auditor’s report for a health benefits fund, the general fund, or the private health insurer for the year previous to the year
This is an opening excerpt, not the complete document.