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Who is affected and why it matters

• Primary effect: Australian lenders mortgage insurers (LMIs) that are general insurers. They must supply detailed exposures, reinsurance and calculated PML figures to APRA quarterly and annually (subject to APRA’s direction). (Application and commencement; Information required)
• Secondary effects: insurers that provide reinsurance to LMIs (inwards reinsurance items are reported), auditors (who must perform specified assurance work), and ADIs / non‑ADI originators indirectly (their origination channel is reported). (GRF_116_5; Quality control)
• Why it matters: APRA collects granular LMI exposure and PML data to supervise capital adequacy (assessing compliance with capital standards, and to derive the LMI Concentration Risk Charge used in prescribed capital calculations). The data underpins APRA’s prudential assessments of LMI resilience to concentrated mortgage losses. (Purpose; GRF_116_4)

Official rationale (claimed purpose) and an evidence‑based test of trade‑offs

• Claimed purpose: to provide APRA with the information needed for prudential supervision and to assess compliance with capital standards (Purpose; Authority). That is implemented by mandating the GRF 116.1 series and tying the PD/LGD/seasoning rules to GPS 116 Attachment A.

• Costs and compliance burden: the instrument imposes recurring data-collection, validation, assurance and electronic-submission burdens on LMIs (Information required; Quality control; Authorisation). The forms require detailed categorisation (multiple LVR bands, coverage rates, age buckets, pools and per‑originator large exposures), which increases data processing and audit costs—especially for smaller LMIs or those whose systems are not structured to produce these tables.

• Incentives and behaviour changes: reporting of exposures by origination channel (ADI vs non‑ADI) and detailed LVR/coverage buckets creates incentives for LMIs and originators to monitor those metrics closely; recurring reporting and auditor confirmation may incentivise stronger internal controls and conservative capital treatment where exposures concentrate. APRA’s discretion to vary reporting or to adjust LMICRC (Variations; GRF_116_4) creates an enforcement backstop but also regulatory uncertainty for firms that might expect individual adjustments.

• Trade‑offs and opportunity cost: APRA gains more granular visibility for supervision at the cost of private-sector time and audit fees. The forms automate many calculations but still rely on insurers to compute weighted averages and to supply accurate inputs; mistakes in source data can propagate into calculated PML and LMICRC results.

• Implementation risk and compliance complexity: reliance on external prudential standards (CPS001 and GPS 116 Attachment A) means that changes to those instruments or interpretation issues can materially affect how the forms are completed. The requirement for limited assurance under AUASB standards links reporting to external audit capacity (Quality control), which could create seasonal capacity constraints around quarter/annual deadlines.

• Concentrated benefits and diffuse costs: APRA and its supervisors obtain concentrated informational benefits; costs are borne by all reporting LMIs (diffuse). Smaller market participants and reinsurers may face proportionally higher administrative costs. The forms also permit APRA to take insurer‑specific action (e.g., change frequency, approve LMICRC variations), which concentrates decision power with APRA (Variations; GRF_116_4).

Concrete decision paths and who pays

• Who pays: LMIs (insurers) bear the compliance, systems and audit costs required to prepare, test and submit the GRF 116.1 series; appointed auditors incur the assurance work required. Reinsurers may be indirectly affected where inwards reinsurance data is reported.
• Who decides: APRA determines form layout and required calculations (this Determination), may vary reporting frequency or the content for particular insurers by notice, and may adjust the LMICRC for individual insurers if needed. Insurer boards and senior management decide internal policies and processes to generate validated data and appoint the Appointed Auditor. (Authority; Reporting periods and due dates; Quality control; Variations)

Key cross‑references that matter operationally

• The forms and some look‑ups explicitly depend on Attachment A of Prudential Standard GPS 116 (for seasoning, PD, LGD) and on GPS 310 for audit expectations. The reporting deadlines link to GRS 001. Those cross‑references mean practitioners must read the Reporting Standard alongside GPS 116, GPS 310 and CPS001. (Interpretation; Quality control; Purpose)

Sections to note for compliance teams

• Application and commencement: who reports and effective date (reporting periods ending on/after 1 April 2025).
• Information required / Forms and method of submission: exact obligation to provide GRF 116.1 series and how to submit.
• Quality control and Authorisation: auditor review and digital-signature/authoriser requirements.
• GRF_116_4 (LMI Concentration Risk Charge): shows how APRA expects PML allocated across a 3‑year stress and how reinsurance and allowable deductions feed into the LMICRC.
• Transition: handling of reporting periods straddling the revocation of the old standard.

What this does not (explicitly) change

• The Determination sets reporting mechanics and data items; it does not itself change the PD/LGD/seasoning tables (those come from GPS 116 Attachment A) or the prudential capital calculation methodology beyond the reporting inputs (although APRA retains discretion to adjust LMICRC outcomes for a particular insurer). (GRF_116_4)

Authority

1. This Reporting Standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001.

Purpose

1. Information collected in Form GRF 116.1 Probable Maximum Loss for LMIs – Standard Loans, Form GRF 116.2 Probable Maximum Loss for LMIs – Non-Standard Loans, Form GRF 116.3 Probable Maximum Loss for LMIs – Commercial Loans, Form GRF 116.4 LMI Concentration Risk Charge and Form GRF 116.5 Probable Maximum Loss for LMIs – Additional Information (the GRF 116.1 series) is used by APRA for the purpose of prudential supervision including assessing compliance with the capital standards.

Application and commencement

1. This Reporting Standard applies to all general insurers authorised under the Insurance Act 1973 (insurers) that are lenders mortgage insurers under paragraph 8 of Prudential Standard CPS 001 Defined terms (CPS001). This Reporting Standard applies for reporting periods ending on or after 1 April 2025.

Information required

1. An insurer must provide APRA with the information required by the GRF 116.1 series for each reporting period.

Forms and method of submission

1. The information required by this Reporting Standard must be given to APRA:

2. 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

1. Subject to paragraph 7, an insurer must provide the information required by this Reporting Standard:

2. in respect of each quarter based on the financial year of the insurer; and

3. in respect of each financial year of the insurer.

Note: The annual information required from an insurer by paragraphs 4, 5 and 6(b), together with certain annual information required by other reporting standards, will form part of the insurer’s yearly statutory accounts within the meaning of section 3 of the Insurance Act 1973 (the Insurance Act). This means that the information must be audited in accordance with paragraph 49J(1)(a) of the Insurance Act. Under subsection 49J(3), the principal auditor of the insurer must give the insurer a certificate relating to the yearly statutory accounts, and that certificate must contain statements of the auditor’s opinions on the matters required by the prudential standards to be dealt with in the certificate.

1. If, having regard to the particular circumstances of an 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 insurer.
2. The information required by this Reporting Standard in respect of an insurer must be provided to APRA:
   1. within the time stated in Reporting Standard GRS 001 Reporting Requirements (GRS 001); or
   2. in the case of information provided in accordance with paragraph 7, within the time specified by notice in writing.

Note: Paragraph 49L(1)(a) of the Insurance Act provides that the auditor’s certificate required under subsection 49J(3) of that Act must be lodged with APRA in accordance with the prudential standards. The prudential standards provide that the certificate must be submitted to APRA together with the yearly statutory accounts. Accordingly, the auditor’s certificate relating to the annual information referred to in subparagraph 6(b) must be provided to APRA by the time specified in GRS 001 (unless an extension of time is granted under GRS 001).

Quality control

1. The information provided by an insurer under this Reporting Standard must be the product of systems, processes and controls that have been reviewed and tested by the Appointed Auditor of the insurer. This will require the Appointed Auditor to review and test the insurer’s systems, processes and controls designed to enable the insurer to report reliable financial information to APRA. This review and testing must be done on:

2. an annual basis or more frequently if necessary to enable the Appointed Auditor to form an opinion on the reliability and accuracy of data; and

3. at least a limited assurance engagement consistent with professional standards and guidance notes issued by the Auditing and Assurance Standards Board (AUASB) as may be amended from time to time, to the extent that they are not inconsistent with the requirements of Prudential Standard GPS 310 Audit and Related Matters.

   1. All information provided by an insurer under this Reporting Standard must be subject to systems, processes and controls developed by the insurer for the internal review and authorisation of that information. It is the responsibility of the Board and senior management of the insurer to ensure that an appropriate set of policies and procedures for the authorisation of data submitted to APRA is in place.

Authorisation

1. When an officer, or agent, of an insurer provides the information required by this Reporting Standard using an electronic format it will be necessary for an officer, or agent, to digitally sign the relevant information using a digital certificate acceptable to APRA.

2. If an insurer provides the information required by this Reporting Standard through an agent who submits using an electronic format on the insurer’s behalf, the insurer must:

   1. obtain from the agent a copy of the completed form with the information provided to APRA; and
   2. retain the completed copy.

3. An officer, or agent, of an insurer who submits the information under this Reporting Standard for, or on behalf of, the insurer must be authorised by either:

4. the Principal Executive Officer of the insurer; or

5. the Chief Financial Officer of the insurer.

Variations

1. APRA may, by written notice to the insurer, vary the reporting requirements of the GRF 116.1 series in relation to that insurer.

Transition

1. An insurer to which the Reporting Standard applies must report under the old reporting standard in respect of a transitional reporting period. For these purposes:

old reporting standard means the reporting standard revoked in the determination making this Reporting Standard; and

transitional reporting period means a reporting period under the old reporting standard:

1. that ended before the date of revocation; and
2. in relation to which the insurer was required, under the old reporting standard, to report by a date on or after the date of revocation of the old reporting standard.

Note: For the avoidance of doubt, if an insurer was required to report under an old reporting standard, and the reporting documents were due before the date of revocation of the old reporting standard, the insurer is still required to provide any overdue reporting documents in accordance with the old reporting standard.

Interpretation

1. In this Reporting Standard (including the attachments):

2. unless the contrary intention appears, words and expressions have the meanings given to them in (CPS 001); and

3. Appointed Auditor means an auditor appointed under paragraph 39(1)(a) of the Insurance Act;

APRA-authorised reinsurer means an insurer carrying on reinsurance business. For the purposes of this definition, a Lloyd’s underwriter as defined under the Insurance Act is an APRA-authorised reinsurer if it carries on reinsurance business;

capital standards means the prudential standards which relate to capital adequacy as defined in CPS 001;

Chief Financial Officer means the chief financial officer of the insurer, by whatever name called;

financial year means the financial year (within the meaning in the Corporations Act 2001) of the insurer;

foreign insurer means a foreign general insurer within the meaning of the Insurance Act;

Note: A reference to a ‘branch’ or ‘branch operation’ is a reference to the Australian operations of a foreign insurer.

general instruction guide refers to the general instruction guide set out in Attachment A of GRS 001;

Insurance Act means the Insurance Act 1973;

insurer means a general insurer within the meaning of section 11 of the Insurance Act;

Note: In the forms and instructions, a reference to an ‘authorised insurer’, ‘authorised insurance entity’ or ‘licensed insurer’ is a reference to an insurer, and a reference to an ‘authorised reinsurance entity’ is a reference to an insurer whose business consists only of undertaking liability by way of reinsurance.

non-APRA-authorised reinsurer means any reinsurer that is not an APRA-authorised reinsurer;

Principal Executive Officer means the principal executive officer of the insurer, by whatever name called, and whether or not he or she is a member of the governing board of the insurer; and

reporting period means a period mentioned in subparagraph 6(a) or (b) or, if applicable, paragraph 7.

<table cellspacing="0" cellpadding="0" style="width:695.35pt; margin-left:4.65pt; border-collapse:collapse"><tbody><tr style="height:15.85pt"><td rowspan="2" style="width:47.05pt; border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; border-left:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.03pt; vertical-align:bottom"><p style="text-align:center"><span style="font-family:Arial, sans-serif; font-weight:bold">LVR greater than (%)</span></p></td><td rowspan="2" style="width:47.1pt; border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.4pt; vertical-align:bottom"><p style="text-align:center"><span style="font-family:Arial, sans-serif; font-weight:bold">LVR less than or equal to (%)</span></p></td><td rowspan="2" style="width:47.05pt; border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.4pt; vertical-align:bottom"><p style="text-align:center"><span style="font-family:Arial, sans-serif; font-weight:bold">Coverage proportion (%)</span></p></td><td colspan="4" style="width:220.7pt; border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.4pt; vertical-align:bottom"><p style="text-align:center"><span style="font-family:Arial, sans-serif; font-weight:bold">Age</span></p></td><td rowspan="2" style="width:47.1pt; border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.4pt; vertical-align:bottom"><p style="text-align:center"><span style="font-family:Arial, sans-serif; font-weight:bold">Total sum insured</span></p></td><td rowspan="2" style="width:47.1pt; border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.4pt; vertical-align:bottom"><p style="text-align:center"><span style="font-family:Arial, sans-serif; font-weight:bold">PD factor</span></p></td><td rowspan="2" style="width:47.1pt; border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.4pt; vertical-align:bottom"><p style="text-align:center"><span style="font-family:Arial, sans-serif; font-weight:bold">LGD factor</span></p><p style="text-align:center"><span style="font-family:Arial, sans-serif; font-weight:bold">(100% cover)</span></p></td><td rowspan="2" style="width:47.1pt; border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.4pt; vertical-align:bottom"><p style="text-align:center"><span style="font-family:Arial, sans-serif; font-weight:bold">LGD factor</span></p><p style="text-align:center"><span style="font-family:Arial, sans-serif; font-weight:bold">(top cover)</span></p></td><td rowspan="2" style="width:47.1pt; border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.4pt; vertical-align:bottom"><p style="text-align:center"><span style="font-family:Arial, sans-serif; font-weight:bold">PML</span></p></td></tr><tr style="height:15.85pt"><td style="width:47.1pt; border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.4pt; vertical-align:bottom"><p style="text-align:center"><span style="font-family:Arial, sans-serif; font-weight:bold">&lt; 3 years</span></p></td><td style="width:47.05pt; border-top:0.75pt solid #000000; border-right:0.75pt solid #000000; padding-right:5.03pt; padding-left:5.4pt; vertical-align:bottom"><p style="text-align:center"><span style="font-family:Arial, sans-serif; font-weight:bold">3 &lt; 5 years</span></p></td><td style="width:47.1pt; border-top:0.7

This is an opening excerpt, not the complete document.