Subdivision Definitions - Financial Sector (Collection of Data) (reporting standard) determination No. 61 of 2023 - Definitions

Definitions

Terms in bold italics are defined in this Definitions section of these instructions.

APRA-approved adjustment amount	This is the amount relating to APRA approved adjustments to specific requirements of the prudential standards for a reporting insurer.
APRA-approved adjustment type	This means the type of APRA-approved adjustment. Possible types relate to the:prescribed capital amount;Asset Risk Charge;Insurance Risk Charge - outstanding claims liabilities;Insurance Risk Charge - premiums liabilities;Insurance Concentration Risk Charge;Asset Concentration Risk Charge; andOperational Risk Charge.
Asset Concentration Risk Charge	The Asset Concentration Risk Charge is the minimum amount of capital required to be held against asset concentration risks. The Asset Concentration Risk Charge relates to the risk resulting from investment concentrations in individual assets or large exposures to individual counterparties or groups of related counterparties resulting in adverse movements in the reporting insurer’s capital base.This must be determined in accordance with Prudential Standard GPS 117 Capital Adequacy: Asset Concentration Risk Charge.
Asset Risk Charge	The Asset Risk Charge is the minimum amount of capital required to be held against asset risks. The Asset Risk Charge relates to the risk of adverse movements in the value of a reporting insurer’s capital base due to credit or market risks.This must be determined in accordance with Prudential Standard GPS 114 Capital Adequacy: Asset Risk Charge.

Insurance Concentration Risk Charge	The Insurance Concentration Risk Charge is the minimum amount of capital required to be held against insurance concentration risks. The Insurance Concentration Risk Charge relates to the risk of an adverse movement in the reporting insurer's capital base due to a single large loss or series of losses.This must be determined in accordance with Prudential Standard GPS 116 Capital Adequacy: Insurance Concentration Risk Charge.
Insurance Risk Charge - outstanding claims liabilities (OCL)	The risk charge for outstanding claims risk relates to the risk that the value of net outstanding claims liabilities (OCL) determined in accordance with Prudential Standard GPS 340 Insurance Liability Valuation (GPS 340) will be insufficient to cover associated net claim payments and any associated claim expenses as they fall due.This must be determined in accordance with Prudential Standard GPS 115 Capital Adequacy: Insurance Risk Charge (GPS 115).
Insurance Risk Charge - premiums liabilities (PL)	This is the Insurance Risk Charge in respect of premiums liability risk, which relates to the risk that the value of the net PL is greater than the value determined in accordance with GPS 340. It also relates to the risk that material net written premium, as defined in GPS 115, will be insufficient to fund the liabilities arising from that business.This must be determined in accordance with GPS 115.

Insurance Concentration Risk Charge

The Insurance Concentration Risk Charge is the minimum amount of capital required to be held against insurance concentration risks. The Insurance Concentration Risk Charge relates to the risk of an adverse movement in the reporting insurer's capital base due to a single large loss or series of losses.This must be determined in accordance with Prudential Standard GPS 116 Capital Adequacy: Insurance Concentration Risk Charge.

Insurance Risk Charge - outstanding claims liabilities (OCL)

The risk charge for outstanding claims risk relates to the risk that the value of net outstanding claims liabilities (OCL) determined in accordance with Prudential Standard GPS 340 Insurance Liability Valuation (GPS 340) will be insufficient to cover associated net claim payments and any associated claim expenses as they fall due.This must be determined in accordance with Prudential Standard GPS 115 Capital Adequacy: Insurance Risk Charge (GPS 115).

Insurance Risk Charge - premiums liabilities (PL)

This is the Insurance Risk Charge in respect of premiums liability risk, which relates to the risk that the value of the net PL is greater than the value determined in accordance with GPS 340. It also relates to the risk that material net written premium, as defined in GPS 115, will be insufficient to fund the liabilities arising from that business.This must be determined in accordance with GPS 115.

Operational Risk Charge	The Operational Risk Charge is the minimum amount of capital required to be held against operational risks. The Operational Risk Charge relates to the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.This must be determined in accordance with Prudential Standard GPS 118 Capital Adequacy: Operational Risk Charge.

Prescribed capital amount	The prescribed capital amount must be determined in accordance with Prudential Standard GPS 110 Capital Adequacy.

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