Financial Sector (Collection of Data) (reporting standard) determination No. 111 of 2023
6. Principles for allocating AASB 17 Ins6. Principles for allocating AASB 17 Insurance Contracts (AASB 17) numbers to APRA product groups (life insurers)
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6. Principles for allocating AASB 17 Insurance Contracts (AASB 17) numbers to APRA product groups (life insurers)
Life insurers are to apply the allocation principles (outlined below) to allocate AASB 17 numbers to APRA product groups (outlined under section 5) where it is not possible to clearly identify AASB 17 numbers and assign it to specific APRA product groups.
- Principle 1: To the extent that AASB 17 balance sheet and income statement items can be readily allocated to APRA product groups, they must be so allocated. Otherwise, the items (including CSM and / or loss component) are to be allocated using allocation approaches. The allocation approaches are to reflect allocation drivers determined based on accounting and / or actuarial judgments. For example, an insurer may decide to determine annual premium income and / or expected claims to be the allocation drivers to allocate AASB 17 items using proportions and / or ratios.
- Principle 2: A systematic and rational approach must be applied.
- Principle 3: The approach must be consistent over time. However, an insurer may change the approach if it views that the approach is no longer appropriate based on accounting and / or actuarial judgements.
- Principle 4: The aggregate of the allocated numbers across APRA product groups must be consistent with AASB 17 numbers reported on a statutory basis.
- Principle 5: A single allocation approach need not necessarily be applied.
Allocation approaches and allocation drivers must be clearly documented. This would support clarity and consistent application of the approaches and drivers for APRA product group reporting over time. Insurers must to prepare a document outlining how they have applied the allocation principles to allocate AASB 17 items to APRA product groups for APRA reporting.
For clarity, life insurers must not use allocation principles to allocate AASB 17 insurance and reinsurance assets and liabilities across the components of the Life Act reporting structure (for details, refer to the requirements outlined in LPS 340).