IntroductionIntroduction

Introduction

This instruction guide is designed to assist in the completion of GRF 210.0_G Outstanding Claims Liability – Insurance Risk Charge (Level 2 Insurance Group).

The form can be used to calculate the insurance risk capital charge associated with the Level 2 insurance group’s Outstanding Claims Liability in accordance with Prudential Standard GPS 111 Capital Adequacy: Level 2 Insurance Groups (GPS 111).

Audit requirements

The annual return of GRF 210.0_G Outstanding Claims Liability – Insurance Risk Charge (Level 2 Insurance Group) required under paragraphs 3 and 5(c) of Reporting Standard GRS 210.0_G must be subject to a limited assurance[2] review by the Group Auditor (see Prudential Standard GPS 311 Audit and Actuarial Reporting and Valuation: Level 2 Insurance Groups (GPS 311)).

The Group Auditor must prepare a review report on the basis of a limited assurance engagement in accordance with the requirements of GPS 311. Assurance in the review report will be provided in the form of negative assurance. To express negative assurance in the review report, the auditor will use limited procedures to obtain sufficient appropriate evidence. Enquiries of the Level 2 insurance group’s staff and analytical procedures will be the primary tools used to obtain evidence. These procedures will not provide all the evidence that would be required in an audit.

The scope and nature of audit testing required is outlined in the Standard on Assurance Engagement ASAE 3000 Assurance Engagements Other than Audits or Reviews of Historical Financial Information issued by the Auditing and Assurance Standards Board.

Reporting entities

GRF 210.0_G Outstanding Claims Liability – Insurance Risk Charge (Level 2 Insurance Group) is to be completed by the parent entity of a Level 2 insurance group as defined under Prudential Standard GPS 001 Definitions (GPS 001).

Consolidation at Level 2 should cover the Level 2 insurance group as defined under GPS 001.

Definitions

For Australian business[3], report insurance business as per APRA-authorised insurer reporting. For international business[4], only report insurance business deemed to be general insurance business.[5] For prudential reporting purposes ‘Level 1 Insurer’ is as defined in GPS 001.

Other definitions for data reporting items required by this form have been provided where possible in the instructions under the section headed ‘Specific instructions’.

Limited Risk Transfer Arrangements

For Australian business a Limited Risk Transfer Arrangement that is approved by APRA as a reinsurance arrangement must be treated accordingly by the Level 2 insurance group for prudential purposes. A Limited Risk Transfer Arrangement that is approved by APRA as a financing arrangement must be accounted for by the Level 2 insurance group so that the arrangement will not misrepresent, or is not designed to disguise, a material risk to the Level 2 insurance group’s current or continuing profitability, solvency or capital adequacy from any party.