Schedule
Schedule
Schedule
Reporting Standard GRS 210 (2010) Insurance Risk Charge comprises the 46 pages commencing on the next page.
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Commonwealth legislation
This Act has been repealed and is no longer in force. It is retained for historical reference.
This standard requires general insurers (including foreign branches in Australia) to regularly report detailed outstanding claims provisions and premium liabilities to APRA — quarterly and annually, usually via APRA’s electronic system. Reports must include a central estimate plus a risk margin (to at least a 75% confidence level), be currency-converted to AUD thousands, and are subject to annual audit and internal review. The data lets APRA monitor insurers’ ability to pay future claims and protect policyholders.
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Direct links to the current provisions in Financial Sector (Collection of Data) (reporting standard) determination No. 7 of 2010 - GRS 210 (2010) - Insurance Risk Charge.
Schedule
Reporting Standard GRS 210 (2010) Insurance Risk Charge comprises the 46 pages commencing on the next page.
This reporting standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001 (the Collection of Data Act). It requires general insurers (insurers), including foreign general insurers operating in Australia through branch operations (foreign insurers), to report to APRA, generally on a quarterly and annual basis, in relation to their outstanding claims provision and premiums liabilities.
This reporting standard outlines the overall requirements for the provision of this information to APRA. It should be read in conjunction with:
(a) in electronic form using the ‘Direct to APRA’ application, applying one of the electronic submission mechanisms under that application; or
(b) by manually completing Forms GRF 210.0 and GRF 210.1 on paper and mailing the completed forms to APRA’s head office at Level 26, 400 George Street, Sydney, New South Wales.
Where the information is submitted by means of an agent to whom the insurer has outsourced the function of providing the information on the insurer’s behalf, the agent may only provide the information in accordance with subparagraph 4(b) if the agent has contacted APRA and advised that the agent cannot submit the information in electronic form under subparagraph 4(a).
Note: the Direct to APRA application software and paper forms may be obtained from APRA.
(a) in respect of each quarter based on the financial year (within the meaning of the Corporations Act 2001) of the insurer; and
(b) in respect of each financial year (within the meaning of the Corporations Act 2001) of the insurer.
Note: The annual information required by paragraph 3 read with subparagraph 5(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 auditor 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.
(a) more frequently (if, having regard to the particular circumstances of the insurer, APRA considers it necessary or desirable to obtain information more frequently for the purposes of the prudential supervision of the insurer); or
(b) less frequently (if, having regard to the particular circumstances of the insurer and the extent to which it requires prudential supervision, APRA considers it unnecessary to require the insurer to provide the information as frequently as provided by subparagraph 5(a) or (b)).
(a) in the case of the quarterly information required by subparagraph 5(a) – 20 business days after the end of the reporting period to which the information relates; and
(b) in the case of the annual information required by subparagraph 5(b) – 4 months after the end of the reporting period to which the information relates.
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 required by paragraph 3 read with subparagraph 5(b) must be provided to APRA by the time specified in subparagraph 7(b) of this reporting standard (unless an extension is granted under paragraph 8).
The information provided by an insurer under this reporting standard must be the product of processes and controls that have been reviewed and tested by the appointed auditor of the insurer. This will require the auditor to review and test the systems, processes and controls supporting the reporting of the information to ensure that they produce accurate data and are otherwise reliable. This review and testing must be done on an annual basis or more frequently if necessary to enable the appointed auditor to form an opinion on the accuracy and reliability of the data.
The information provided by an insurer under this reporting standard must be subject to 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.
(a) under subparagraph 4(a), the officer must digitally sign, authorise and encrypt the information (for which purpose APRA’s certificate authority will issue digital certificates, for use with the ‘Direct to APRA’ application, to officers of the insurer who have authority from the insurer to transmit data to APRA); or
(b) under subparagraph 4(b), the completed form must be signed in accordance with paragraph 13.
(a) obtain from the agent paper copies of the completed forms as provided to APRA (under either subparagraph 4(a) or (b)); and
(b) cause the paper copies to be signed in accordance with paragraph 13; and
(c) lodge the signed paper copies with APRA by mailing the completed forms to APRA’s head office at Level 26, 400 George Street, Sydney, New South Wales, by the relevant due date (unless APRA, in writing, waives the requirement in relation to the insurer to lodge the signed paper copies with APRA).
Note: APRA may, for example, decide to waive the requirement under subparagraph 12(c) where an insurer has undertaken to retain the signed copies of the completed form for an agreed period of time.
(a) the Principal Executive Officer of the insurer; or
(b) the Chief Financial Officer of the insurer (whatever his or her official title may be).
APRA may make minor variations to the instructions to a form, to clarify their application to the form provided it does not involve changing any substantive requirement in the form or instructions.
If APRA makes such a variation it must notify insurers of this in writing.
Transition
Interpretation
appointed auditor means an auditor appointed under paragraph 39(1)(a) of the Insurance Act;
business days means ordinary business days, exclusive of Saturdays, Sundays and public holidays;
capital standards means the prudential standards which relate to capital adequacy as defined in Prudential Standard GPS 001 Definitions;
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.
Insurance Act means the Insurance Act 1973;
insurer means a general insurer within the meaning 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.
reporting period means a period mentioned in subparagraph 5(a) or (b) or, if applicable, paragraph 6.
This reporting standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001 (the Collection of Data Act). It requires general insurers (insurers), including foreign general insurers operating in Australia through branch operations (foreign insurers), to report to APRA, generally on a quarterly and annual basis, in relation to their outstanding claims provision and premiums liabilities.
This reporting standard outlines the overall requirements for the provision of this information to APRA. It should be read in conjunction with:
(a) in electronic form using the ‘Direct to APRA’ application, applying one of the electronic submission mechanisms under that application; or
(b) by manually completing Forms GRF 210.0 and GRF 210.1 on paper and mailing the completed forms to APRA’s head office at Level 26, 400 George Street, Sydney, New South Wales.
Where the information is submitted by means of an agent to whom the insurer has outsourced the function of providing the information on the insurer’s behalf, the agent may only provide the information in accordance with subparagraph 4(b) if the agent has contacted APRA and advised that the agent cannot submit the information in electronic form under subparagraph 4(a).
Note: the Direct to APRA application software and paper forms may be obtained from APRA.
(a) in respect of each quarter based on the financial year (within the meaning of the Corporations Act 2001) of the insurer; and
(b) in respect of each financial year (within the meaning of the Corporations Act 2001) of the insurer.
Note: The annual information required by paragraph 3 read with subparagraph 5(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 auditor 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.
(a) more frequently (if, having regard to the particular circumstances of the insurer, APRA considers it necessary or desirable to obtain information more frequently for the purposes of the prudential supervision of the insurer); or
(b) less frequently (if, having regard to the particular circumstances of the insurer and the extent to which it requires prudential supervision, APRA considers it unnecessary to require the insurer to provide the information as frequently as provided by subparagraph 5(a) or (b)).
(a) in the case of the quarterly information required by subparagraph 5(a) – 20 business days after the end of the reporting period to which the information relates; and
(b) in the case of the annual information required by subparagraph 5(b) – 4 months after the end of the reporting period to which the information relates.
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 required by paragraph 3 read with subparagraph 5(b) must be provided to APRA by the time specified in subparagraph 7(b) of this reporting standard (unless an extension is granted under paragraph 8).
The information provided by an insurer under this reporting standard must be the product of processes and controls that have been reviewed and tested by the appointed auditor of the insurer. This will require the auditor to review and test the systems, processes and controls supporting the reporting of the information to ensure that they produce accurate data and are otherwise reliable. This review and testing must be done on an annual basis or more frequently if necessary to enable the appointed auditor to form an opinion on the accuracy and reliability of the data.
The information provided by an insurer under this reporting standard must be subject to 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.
(a) under subparagraph 4(a), the officer must digitally sign, authorise and encrypt the information (for which purpose APRA’s certificate authority will issue digital certificates, for use with the ‘Direct to APRA’ application, to officers of the insurer who have authority from the insurer to transmit data to APRA); or
(b) under subparagraph 4(b), the completed form must be signed in accordance with paragraph 13.
(a) obtain from the agent paper copies of the completed forms as provided to APRA (under either subparagraph 4(a) or (b)); and
(b) cause the paper copies to be signed in accordance with paragraph 13; and
(c) lodge the signed paper copies with APRA by mailing the completed forms to APRA’s head office at Level 26, 400 George Street, Sydney, New South Wales, by the relevant due date (unless APRA, in writing, waives the requirement in relation to the insurer to lodge the signed paper copies with APRA).
Note: APRA may, for example, decide to waive the requirement under subparagraph 12(c) where an insurer has undertaken to retain the signed copies of the completed form for an agreed period of time.
(a) the Principal Executive Officer of the insurer; or
(b) the Chief Financial Officer of the insurer (whatever his or her official title may be).
APRA may make minor variations to the instructions to a form, to clarify their application to the form provided it does not involve changing any substantive requirement in the form or instructions.
If APRA makes such a variation it must notify insurers of this in writing.
Transition
Interpretation
appointed auditor means an auditor appointed under paragraph 39(1)(a) of the Insurance Act;
business days means ordinary business days, exclusive of Saturdays, Sundays and public holidays;
capital standards means the prudential standards which relate to capital adequacy as defined in Prudential Standard GPS 001 Definitions;
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.
Insurance Act means the Insurance Act 1973;
insurer means a general insurer within the meaning 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.
reporting period means a period mentioned in subparagraph 5(a) or (b) or, if applicable, paragraph 6.
This instruction guide is designed to assist in the completion of GRF 210.0 Outstanding Claims Provision – Insurance Risk Charge.
The form can be used to calculate the risk capital charge associated with the licensed insurer’s Outstanding Claims Provision (OCP) in accordance with Prudential Standard GPS 115 Capital Adequacy: Insurance Risk Capital Charge (GPS 115).
The value of the OCP and the reinsurance recoveries that are included in this form must be measured in accordance with Prudential Standard GPS 310 Audit and Actuarial Reporting and Valuation (GPS 310).
The purpose of this form is to provide detailed information in relation to the following:
This form that relates to Authorised insurance entities and reinsurance entities is required to be subject to audit review and testing.
The scope and nature of audit testing required is outlined in the applicable Auditing and Assurance Standards Board Guidance Statement issued by the Auditing and Assurance Standards Board.
Information provided in the form in respect of a financial year of an insurer forms part of the insurer’s ‘yearly statutory accounts’ within the meaning of section 3 of the Insurance Act 1973 (the Act). This means that:
the completed form for the financial year must be audited by the Appointed Auditor of the insurer (see paragraph 49J(1)(a) of the Act);
the insurer must make such arrangements as to enable the auditor to do this (subsection 49J(2));
the auditor must give the insurer a certificate relating to the completed form (and other completed forms that are part of the insurer’s yearly statutory accounts), which must contain statements of the auditor’s opinion on the matters required by the prudential standards to be dealt with in the certificate (subsection 49J(3)); and
the certificate must be lodged with APRA as provided for in the prudential standards (paragraph 49L(1)(a)), namely by the due date for lodging the form in respect of the financial year for the insurer.
This form is to be completed by:
Definitions
Definitions for data reporting items required by this form have been provided where possible in the instructions under the section headed ‘Specific Instructions’.
Unit of measurement
This form is to be prepared in thousands of Australian dollars (AUD). Amounts denominated in a currency other than Australian currency are to be converted to AUD in accordance with AASB 121 ‘The Effects of Changes in Foreign Exchange Rates’ (AASB 121).
The general requirements of AASB 121 for translation are:
Transactions arising under foreign currency derivative contracts at the reporting date must be prepared in accordance with AASB 139 ‘Financial Instruments: Recognition and Measurement’ (AASB 139). However, those foreign currency derivatives that are not within the scope of AASB 139 ‘(e.g. some foreign currency derivatives that are embedded in other contracts) remain within the scope of AASB 121.
For APRA purposes equity items must be translated using the foreign currency exchange rate at the date of investment or acquisition. Post acquisition changes in equity are required to be translated on the date of the movement.
As foreign currency derivatives are measured at fair value, the currency derivative contracts are translated at the spot rate at the reporting date.
Exchange differences should be recognised in profit and loss in the period which they arise. For foreign currency derivatives, the exchange differences would be recognised immediately in profit and loss if the hedging instrument is a fair value hedge. For derivatives used in a cash flow hedge, the exchange differences should be recognised directly in equity.
The ineffective portion of the exchange differences in all hedges would be recognised in profit and loss.
A foreign operation is defined in AASB 121 as meaning an entity that is a subsidiary, associate, joint venture or branch of a reporting entity, the activities of which are based or conducted in a country or currency other than those of the reporting entity.
Reporting period
Insurers are required to report the information in the reporting form on a quarterly and annual basis.
This form must be lodged for each of the reporting units, within the number of business days after the end of the quarter as set out in Reporting Standard GRS 210.0 Outstanding Claims Provision – Insurance Risk Charge.
Specific instructions
Classes of Business (1)
The classes of insurance business are as follows:
(I). Houseowners/householders (H & H)
This class covers the common H & H policies inclusive of:
Public liability normally attaching to these products are to be separated and included in Public and product liability class of business – item (XIII).
(II). Commercial Motor Vehicle
Motor vehicle insurance (including third party property damage) other than insurance covering vehicles defined below under Domestic motor vehicle. It includes long and medium haul trucks, cranes and special vehicles and policies covering fleets.
(III). Domestic motor vehicle
Motor vehicle insurance (including third party property damage) covering private use motor vehicles including utilities and lorries, motor cycles, private caravans, box and boat trailers and other vehicles not normally covered by business or commercial policies.
(IV). Travel
Insurance against losses associated with travel including loss of baggage and personal effects, losses on flight cancellations and overseas medical costs.
(V). Fire and Industrial Special Risks (ISR)
Includes all policies normally classified as 'Fire' and includes:
Standard policy wordings exist for this type of policy. All policies which contain such standard wordings or where the wording is substantially similar are to be classified as ISR.
(VI). Marine
Includes Marine Hull (including pleasure craft) and Marine Cargo (including sea and inland transit insurance).
(VII). Aviation
Aviation (including aircraft hull and aircraft liability).
(VIII). Mortgage
Insurance against losses arising from the failure of debtors to meet financial obligations to creditors or under which payment of debts is guaranteed. It includes lease guarantee.
(IX). Consumer credit
Insurance to protect a consumer's ability to meet the loan repayments on personal loans and credit card finance in the event of death or loss of income due to injury, illness or unemployment.
(X). Other accident
Includes the following types of insurance:
(XI). Other
All other insurance business not specifically mentioned elsewhere. It includes, for example:
(XII). Compulsory Third Party Motor Vehicle (CTP)
This class consists only of CTP business.
(XIII). Public and Product Liability
(XIV). Professional Indemnity (PI)
PI covers professionals against liability incurred as a result of errors and omissions in performing professional services which has resulted in economic losses suffered by third parties.
Includes Directors' and Officers' liability insurance plus legal expense insurance. Cover for legal expenses is generally included in this type of policy.
(XV). Employers' Liability (EL)
Includes:
The classes of business for companies that provide reinsurance are as follows:
Treaty Proportional: This refers to all forms of quota share and surplus reinsurance written on a treaty reinsurance arrangement where the reinsurer is bound to accept all business ceded by the reinsured subject to the terms and conditions of the pre-agreed treaty wording, and shares in the same proportion of premium and losses of the reinsured.
Treaty Excess of Loss: This refers to all reinsurance arrangements where the reinsurer is bound to accept all business ceded by the reinsured and the reinsurer pays losses only above an agreed predetermined limit (retention) up to an agreed maximum amount.
Facultative Proportional: This refers to non-treaty arrangements where each reinsurance contract is on an individual offer and acceptance basis and the reinsurer shares in the same proportion of premium and losses of the reinsured.
Facultative Excess of Loss: This refers to non-treaty arrangements where each reinsurance contract is on an individual offer and acceptance basis. The reinsurer pays losses only above an agreed predetermined limit (retention) up to an agreed maximum amount.
Reinsurance non-split: This line item classification disclosed under Reinsurance class of business is to be used where it is not possible for the insurer to separately split out all the classes of reinsurance businesses. However as required by GPS 115, where an insurer underwrites an inwards reinsurance contract and is unable to split this business into the classes and types listed in that prudential standard, it must use the highest factors on its outstanding claims provision.
Where an insurer underwrites an inwards reinsurance contract which spans multiple classes and the insurer cannot readily split the contract between classes, the contract must be allocated by using an appropriate method (provided the same method is used for all contracts and for all subsequent periods), including the following methods:
(a) allocate the contract to the category which represents the greatest exposure; or
(b) allocate the contract to the category representing the greatest premium income.
Outstanding Claims Provision
OCP relates to all claims incurred prior to the valuation date, whether or not they have been reported to the insurer. The value of the OCP must include an amount in respect of the expenses that the insurer expects to incur in settling these claims. The value of OCP must not include any Government charges imposed such as levies, duties and taxes.
OCP are to be determined on a prospective basis; both net and gross of reinsurance recoverables and non-reinsurance recoveries.
The valuation of OCP for each class of business must comprise:
(a) a central estimate (refer below); and
(b) a risk margin (refer below) that relates to the inherent uncertainty in the central estimates values.
The valuation of insurance liabilities (i.e. OCP and premiums liabilities) reflects the individual circumstances of the insurer. In any event, the value of insurance liabilities must be the greater of a value that is:
(a) determined on a basis that is intended to value the insurance liabilities of the insurer at a 75 percent level of sufficiency; and
(b) the central estimate plus one half of a standard deviation above the mean for the insurance liabilities of the insurer.
(a) The central estimate
The central estimate is intended to reflect the mean value in the range of possible values for the outcome (that is, the mean of the distribution of probabilistic outcomes). The determination of the central estimate must be based on assumptions as to future experience which reflect the experience and circumstances of the insurer and which are:
Where experience is highly volatile, model parameters estimated from the experience can also be volatile. The central estimate should therefore reflect as closely as possible the likely future experience of the insurer. Judgement may be required to limit the volatility of the assumed parameters to that which is justified in terms of the credibility of the experience data.
The central estimate will be measured as the present value of the future expected payments. This measurement process will involve prospective calculations and modelling techniques, and will require assumptions in respect of the expected future experience, taking into account all factors which are considered to be material to the calculation, including:
The assumptions used must be consistent for the estimation of both OCP and premiums liabilities. Where they are not, the reasons must be documented.
(b) The risk margin
The risk margin is to be valued in accordance with the requirements of GPS 310. The risk margin is the component of the value of OCP that relates to the inherent uncertainty that outcomes will differ from the central estimate. It is aimed at ensuring that the value of the OCP is established at an appropriate and sufficient level. The risk margin does not relate to the risk associated with the underlying assets, including asset-liability mismatch risk.
Risk margins must be determined, for each class of business, and in total, on a basis that reflects the experience of the insurer. In any event, the risk margin must be valued so that the insurance liabilities of the insurer, after any diversification benefit, are not less than the greater of a value that is:
(a) determined on a basis that is intended to value the insurance liabilities of the insurer at a 75 per cent level of sufficiency; and
(b) the central estimate plus one half of a standard deviation above the mean for the insurance liabilities of the insurer.
The risk margins must be determined having regard to the uncertainty of the gross insurance liabilities and to any uncertainty related to the estimate of reinsurance recoverables, expected reinsurance recoveries and non-reinsurance recoveries that are deducted from the estimate of gross insurance liabilities.
The insurer is free to reserve for the OCP in GRF 300.0 Statement of Financial Position at a level different to the amount required by GPS 310. However for the purposes of this form only, the OCP is to be measured and reported in accordance with GPS 310 and disclosed by type of insurance business (direct business and inward reinsurance business).
Note: Any amount of the OCP reported in GRF 300.0 Statement of Financial Position in excess or deficit of the amount required by GPS 310, will be added back to / deducted from net assets in Australia in GRF 110.0 Minimum Capital Requirement for branch insurers and added back to or deducted from Tier 1 capital in GRF 120.0 Determination of Capital Base for all other insurers.
Quarterly actuarial reviews are not required to be conducted specifically for the purposes of completing this form.
For ‘Direct business’ and ‘Reinsurance’ business, amounts are to be reported as follows:
Part 1: Direct business
Includes OCP associated with the insurance business written directly by the insurer.
Note: For the purposes of completing this form, Branch insurers (Category C insurers) are to report the total OCP. This will include amounts inside and outside Australia.
Part 2: Reinsurance business
Include OCP associated with reinsurance business written by the insurer.
Note: For the purposes of completing this form, Branch insurers (Category C insurers) are to report the total OCP. This will include amounts inside and outside Australia.
Outstanding Claims Provision
Gross OCP - Central Estimate (2)
For each line of business, report the central estimate of the OCP that is calculated in accordance with GPS 310.
Gross OCP - Risk Margin (3)
For each line of business, report the risk margin for the OCP that is calculated in accordance with GPS 310.
Gross OCP - Total (4)
Represents the total of the central estimate and risk margin. Do not enter a value as this is automatically calculated by the form.
Non-Reinsurance Recoveries (5)
Non-reinsurance recoveries are amounts that may be recovered under arrangements other than reinsurance arrangements, such as salvage and subrogation.
For each line of business report the non-reinsurance recoveries associated with the OCP.
Reinsurance Recoveries[5] (6)
For each line of business report the reinsurance recoverables associated with the OCP calculated in accordance with GPS 310.
Insurers should recognise reinsurance recoverables, which are calculated in accordance with GPS 310, but which are due from reinsurance arrangements that do not fully meet the reinsurance documentation tests specified in Prudential Standard GPS 112 Capital Adequacy: Measurement of Capital.
Reinsurance recoverables would normally be estimated on the basis of each class of business written by the insurer. However, there are certain forms of reinsurance where recoveries depend on the combined claims experience of several or all classes of business underwritten by the insurer. In such instances, the estimation will be required to factor in all the individual results by class of business covered by the reinsurance arrangement.
OCP - Net of reinsurance and non-reinsurance recoveries
Net OCP - Central Estimate (7)
For each line of business report the central estimate, net of reinsurance and non-reinsurance recoveries, associated with the OCP that is calculated in accordance with GPS 310.
Net OCP - Risk Margin (8)
For each line of business, report the risk margin, net of reinsurance and non-reinsurance recoveries, associated with the OCP that is calculated in accordance with GPS 310.
Total OCP net of RI Recoveries and Non-RI Recoveries (9)
Total OCP net of Reinsurance Recoveries and Non-reinsurance Recoveries is calculated as:
Do not enter a value as this is automatically calculated by the form.
OCP Capital factor % (10)
This column states the insurance risk capital factor applicable to each line of business. The capital factors are taken from GPS 115.
OCP Insurance risk charge (11)
This column represents the insurance risk capital charge applicable to each line of business. The capital charge is calculated on the basis of risk capital factors specified in GPS 115.
The OCP insurance risk charge is automatically calculated; do not enter values. The total of this column for direct business and reinsurance business is included in the calculation of the minimum capital requirement for the insurer.
Net OCL per GRF 300.0 (12)Include in this item the value of net outstanding claims liabilities that are recognised in GRF 300.0 Statement of Financial Position. This is calculated on a net basis as per the following:
Calculate the total OCL net of Reinsurance and Non-Reinsurance Recoveries (including input tax credits) as reported in GRF 300.0 Statement of Financial Position (GRF 300.0) and GRF 301.0 Reinsurance Assets and Risk Charge (GRF 301.0) as:
OCP Surplus / (Deficit) (13)
This column is automatically calculated by the form and represents column (12) ‘Net OCL per GRF 300.0’ less column (9) ‘Total OCP net of RI Recoveries & Non-RI Recoveries’.
For all insurers except category C insurers, the difference (whether positive or negative) should be reported in item 1.1.4 ‘OCP surplus / (deficit) per GRF 210.0 Outstanding Claims Provision - Insurance Risk Charge’ of GRF 120.0 Determination of Capital Base.
For category C insurers the difference (whether positive or negative) should be reported in item 29.1 ‘OCP surplus / (deficit) inside Australia on form GRF 300.0 Statement of financial Position (B).
This instruction guide is designed to assist in the completion of GRF 210.0 Outstanding Claims Provision – Insurance Risk Charge.
The form can be used to calculate the risk capital charge associated with the licensed insurer’s Outstanding Claims Provision (OCP) in accordance with Prudential Standard GPS 115 Capital Adequacy: Insurance Risk Capital Charge (GPS 115).
The value of the OCP and the reinsurance recoveries that are included in this form must be measured in accordance with Prudential Standard GPS 310 Audit and Actuarial Reporting and Valuation (GPS 310).
The purpose of this form is to provide detailed information in relation to the following:
This form that relates to Authorised insurance entities and reinsurance entities is required to be subject to audit review and testing.
The scope and nature of audit testing required is outlined in the applicable Auditing and Assurance Standards Board Guidance Statement issued by the Auditing and Assurance Standards Board.
Information provided in the form in respect of a financial year of an insurer forms part of the insurer’s ‘yearly statutory accounts’ within the meaning of section 3 of the Insurance Act 1973 (the Act). This means that:
the completed form for the financial year must be audited by the Appointed Auditor of the insurer (see paragraph 49J(1)(a) of the Act);
the insurer must make such arrangements as to enable the auditor to do this (subsection 49J(2));
the auditor must give the insurer a certificate relating to the completed form (and other completed forms that are part of the insurer’s yearly statutory accounts), which must contain statements of the auditor’s opinion on the matters required by the prudential standards to be dealt with in the certificate (subsection 49J(3)); and
the certificate must be lodged with APRA as provided for in the prudential standards (paragraph 49L(1)(a)), namely by the due date for lodging the form in respect of the financial year for the insurer.
This form is to be completed by:
Definitions
Definitions for data reporting items required by this form have been provided where possible in the instructions under the section headed ‘Specific Instructions’.
Unit of measurement
This form is to be prepared in thousands of Australian dollars (AUD). Amounts denominated in a currency other than Australian currency are to be converted to AUD in accordance with AASB 121 ‘The Effects of Changes in Foreign Exchange Rates’ (AASB 121).
The general requirements of AASB 121 for translation are:
Transactions arising under foreign currency derivative contracts at the reporting date must be prepared in accordance with AASB 139 ‘Financial Instruments: Recognition and Measurement’ (AASB 139). However, those foreign currency derivatives that are not within the scope of AASB 139 ‘(e.g. some foreign currency derivatives that are embedded in other contracts) remain within the scope of AASB 121.
For APRA purposes equity items must be translated using the foreign currency exchange rate at the date of investment or acquisition. Post acquisition changes in equity are required to be translated on the date of the movement.
As foreign currency derivatives are measured at fair value, the currency derivative contracts are translated at the spot rate at the reporting date.
Exchange differences should be recognised in profit and loss in the period which they arise. For foreign currency derivatives, the exchange differences would be recognised immediately in profit and loss if the hedging instrument is a fair value hedge. For derivatives used in a cash flow hedge, the exchange differences should be recognised directly in equity.
The ineffective portion of the exchange differences in all hedges would be recognised in profit and loss.
A foreign operation is defined in AASB 121 as meaning an entity that is a subsidiary, associate, joint venture or branch of a reporting entity, the activities of which are based or conducted in a country or currency other than those of the reporting entity.
Reporting period
Insurers are required to report the information in the reporting form on a quarterly and annual basis.
This form must be lodged for each of the reporting units, within the number of business days after the end of the quarter as set out in Reporting Standard GRS 210.0 Outstanding Claims Provision – Insurance Risk Charge.
Specific instructions
Classes of Business (1)
The classes of insurance business are as follows:
(I). Houseowners/householders (H & H)
This class covers the common H & H policies inclusive of:
Public liability normally attaching to these products are to be separated and included in Public and product liability class of business – item (XIII).
(II). Commercial Motor Vehicle
Motor vehicle insurance (including third party property damage) other than insurance covering vehicles defined below under Domestic motor vehicle. It includes long and medium haul trucks, cranes and special vehicles and policies covering fleets.
(III). Domestic motor vehicle
Motor vehicle insurance (including third party property damage) covering private use motor vehicles including utilities and lorries, motor cycles, private caravans, box and boat trailers and other vehicles not normally covered by business or commercial policies.
(IV). Travel
Insurance against losses associated with travel including loss of baggage and personal effects, losses on flight cancellations and overseas medical costs.
(V). Fire and Industrial Special Risks (ISR)
Includes all policies normally classified as 'Fire' and includes:
Standard policy wordings exist for this type of policy. All policies which contain such standard wordings or where the wording is substantially similar are to be classified as ISR.
(VI). Marine
Includes Marine Hull (including pleasure craft) and Marine Cargo (including sea and inland transit insurance).
(VII). Aviation
Aviation (including aircraft hull and aircraft liability).
(VIII). Mortgage
Insurance against losses arising from the failure of debtors to meet financial obligations to creditors or under which payment of debts is guaranteed. It includes lease guarantee.
(IX). Consumer credit
Insurance to protect a consumer's ability to meet the loan repayments on personal loans and credit card finance in the event of death or loss of income due to injury, illness or unemployment.
(X). Other accident
Includes the following types of insurance:
(XI). Other
All other insurance business not specifically mentioned elsewhere. It includes, for example:
(XII). Compulsory Third Party Motor Vehicle (CTP)
This class consists only of CTP business.
(XIII). Public and Product Liability
(XIV). Professional Indemnity (PI)
PI covers professionals against liability incurred as a result of errors and omissions in performing professional services which has resulted in economic losses suffered by third parties.
Includes Directors' and Officers' liability insurance plus legal expense insurance. Cover for legal expenses is generally included in this type of policy.
(XV). Employers' Liability (EL)
Includes:
The classes of business for companies that provide reinsurance are as follows:
Treaty Proportional: This refers to all forms of quota share and surplus reinsurance written on a treaty reinsurance arrangement where the reinsurer is bound to accept all business ceded by the reinsured subject to the terms and conditions of the pre-agreed treaty wording, and shares in the same proportion of premium and losses of the reinsured.
Treaty Excess of Loss: This refers to all reinsurance arrangements where the reinsurer is bound to accept all business ceded by the reinsured and the reinsurer pays losses only above an agreed predetermined limit (retention) up to an agreed maximum amount.
Facultative Proportional: This refers to non-treaty arrangements where each reinsurance contract is on an individual offer and acceptance basis and the reinsurer shares in the same proportion of premium and losses of the reinsured.
Facultative Excess of Loss: This refers to non-treaty arrangements where each reinsurance contract is on an individual offer and acceptance basis. The reinsurer pays losses only above an agreed predetermined limit (retention) up to an agreed maximum amount.
Reinsurance non-split: This line item classification disclosed under Reinsurance class of business is to be used where it is not possible for the insurer to separately split out all the classes of reinsurance businesses. However as required by GPS 115, where an insurer underwrites an inwards reinsurance contract and is unable to split this business into the classes and types listed in that prudential standard, it must use the highest factors on its outstanding claims provision.
Where an insurer underwrites an inwards reinsurance contract which spans multiple classes and the insurer cannot readily split the contract between classes, the contract must be allocated by using an appropriate method (provided the same method is used for all contracts and for all subsequent periods), including the following methods:
(a) allocate the contract to the category which represents the greatest exposure; or
(b) allocate the contract to the category representing the greatest premium income.
Outstanding Claims Provision
OCP relates to all claims incurred prior to the valuation date, whether or not they have been reported to the insurer. The value of the OCP must include an amount in respect of the expenses that the insurer expects to incur in settling these claims. The value of OCP must not include any Government charges imposed such as levies, duties and taxes.
OCP are to be determined on a prospective basis; both net and gross of reinsurance recoverables and non-reinsurance recoveries.
The valuation of OCP for each class of business must comprise:
(a) a central estimate (refer below); and
(b) a risk margin (refer below) that relates to the inherent uncertainty in the central estimates values.
The valuation of insurance liabilities (i.e. OCP and premiums liabilities) reflects the individual circumstances of the insurer. In any event, the value of insurance liabilities must be the greater of a value that is:
(a) determined on a basis that is intended to value the insurance liabilities of the insurer at a 75 percent level of sufficiency; and
(b) the central estimate plus one half of a standard deviation above the mean for the insurance liabilities of the insurer.
(a) The central estimate
The central estimate is intended to reflect the mean value in the range of possible values for the outcome (that is, the mean of the distribution of probabilistic outcomes). The determination of the central estimate must be based on assumptions as to future experience which reflect the experience and circumstances of the insurer and which are:
Where experience is highly volatile, model parameters estimated from the experience can also be volatile. The central estimate should therefore reflect as closely as possible the likely future experience of the insurer. Judgement may be required to limit the volatility of the assumed parameters to that which is justified in terms of the credibility of the experience data.
The central estimate will be measured as the present value of the future expected payments. This measurement process will involve prospective calculations and modelling techniques, and will require assumptions in respect of the expected future experience, taking into account all factors which are considered to be material to the calculation, including:
The assumptions used must be consistent for the estimation of both OCP and premiums liabilities. Where they are not, the reasons must be documented.
(b) The risk margin
The risk margin is to be valued in accordance with the requirements of GPS 310. The risk margin is the component of the value of OCP that relates to the inherent uncertainty that outcomes will differ from the central estimate. It is aimed at ensuring that the value of the OCP is established at an appropriate and sufficient level. The risk margin does not relate to the risk associated with the underlying assets, including asset-liability mismatch risk.
Risk margins must be determined, for each class of business, and in total, on a basis that reflects the experience of the insurer. In any event, the risk margin must be valued so that the insurance liabilities of the insurer, after any diversification benefit, are not less than the greater of a value that is:
(a) determined on a basis that is intended to value the insurance liabilities of the insurer at a 75 per cent level of sufficiency; and
(b) the central estimate plus one half of a standard deviation above the mean for the insurance liabilities of the insurer.
The risk margins must be determined having regard to the uncertainty of the gross insurance liabilities and to any uncertainty related to the estimate of reinsurance recoverables, expected reinsurance recoveries and non-reinsurance recoveries that are deducted from the estimate of gross insurance liabilities.
The insurer is free to reserve for the OCP in GRF 300.0 Statement of Financial Position at a level different to the amount required by GPS 310. However for the purposes of this form only, the OCP is to be measured and reported in accordance with GPS 310 and disclosed by type of insurance business (direct business and inward reinsurance business).
Note: Any amount of the OCP reported in GRF 300.0 Statement of Financial Position in excess or deficit of the amount required by GPS 310, will be added back to / deducted from net assets in Australia in GRF 110.0 Minimum Capital Requirement for branch insurers and added back to or deducted from Tier 1 capital in GRF 120.0 Determination of Capital Base for all other insurers.
Quarterly actuarial reviews are not required to be conducted specifically for the purposes of completing this form.
For ‘Direct business’ and ‘Reinsurance’ business, amounts are to be reported as follows:
Part 1: Direct business
Includes OCP associated with the insurance business written directly by the insurer.
Note: For the purposes of completing this form, Branch insurers (Category C insurers) are to report the total OCP. This will include amounts inside and outside Australia.
Part 2: Reinsurance business
Include OCP associated with reinsurance business written by the insurer.
Note: For the purposes of completing this form, Branch insurers (Category C insurers) are to report the total OCP. This will include amounts inside and outside Australia.
Outstanding Claims Provision
Gross OCP - Central Estimate (2)
For each line of business, report the central estimate of the OCP that is calculated in accordance with GPS 310.
Gross OCP - Risk Margin (3)
For each line of business, report the risk margin for the OCP that is calculated in accordance with GPS 310.
Gross OCP - Total (4)
Represents the total of the central estimate and risk margin. Do not enter a value as this is automatically calculated by the form.
Non-Reinsurance Recoveries (5)
Non-reinsurance recoveries are amounts that may be recovered under arrangements other than reinsurance arrangements, such as salvage and subrogation.
For each line of business report the non-reinsurance recoveries associated with the OCP.
Reinsurance Recoveries[5] (6)
For each line of business report the reinsurance recoverables associated with the OCP calculated in accordance with GPS 310.
Insurers should recognise reinsurance recoverables, which are calculated in accordance with GPS 310, but which are due from reinsurance arrangements that do not fully meet the reinsurance documentation tests specified in Prudential Standard GPS 112 Capital Adequacy: Measurement of Capital.
Reinsurance recoverables would normally be estimated on the basis of each class of business written by the insurer. However, there are certain forms of reinsurance where recoveries depend on the combined claims experience of several or all classes of business underwritten by the insurer. In such instances, the estimation will be required to factor in all the individual results by class of business covered by the reinsurance arrangement.
OCP - Net of reinsurance and non-reinsurance recoveries
Net OCP - Central Estimate (7)
For each line of business report the central estimate, net of reinsurance and non-reinsurance recoveries, associated with the OCP that is calculated in accordance with GPS 310.
Net OCP - Risk Margin (8)
For each line of business, report the risk margin, net of reinsurance and non-reinsurance recoveries, associated with the OCP that is calculated in accordance with GPS 310.
Total OCP net of RI Recoveries and Non-RI Recoveries (9)
Total OCP net of Reinsurance Recoveries and Non-reinsurance Recoveries is calculated as:
Do not enter a value as this is automatically calculated by the form.
OCP Capital factor % (10)
This column states the insurance risk capital factor applicable to each line of business. The capital factors are taken from GPS 115.
OCP Insurance risk charge (11)
This column represents the insurance risk capital charge applicable to each line of business. The capital charge is calculated on the basis of risk capital factors specified in GPS 115.
The OCP insurance risk charge is automatically calculated; do not enter values. The total of this column for direct business and reinsurance business is included in the calculation of the minimum capital requirement for the insurer.
Net OCL per GRF 300.0 (12)Include in this item the value of net outstanding claims liabilities that are recognised in GRF 300.0 Statement of Financial Position. This is calculated on a net basis as per the following:
Calculate the total OCL net of Reinsurance and Non-Reinsurance Recoveries (including input tax credits) as reported in GRF 300.0 Statement of Financial Position (GRF 300.0) and GRF 301.0 Reinsurance Assets and Risk Charge (GRF 301.0) as:
OCP Surplus / (Deficit) (13)
This column is automatically calculated by the form and represents column (12) ‘Net OCL per GRF 300.0’ less column (9) ‘Total OCP net of RI Recoveries & Non-RI Recoveries’.
For all insurers except category C insurers, the difference (whether positive or negative) should be reported in item 1.1.4 ‘OCP surplus / (deficit) per GRF 210.0 Outstanding Claims Provision - Insurance Risk Charge’ of GRF 120.0 Determination of Capital Base.
For category C insurers the difference (whether positive or negative) should be reported in item 29.1 ‘OCP surplus / (deficit) inside Australia on form GRF 300.0 Statement of financial Position (B).
This instruction guide is designed to assist in the completion of GRF 210.0 Outstanding Claims Provision – Insurance Risk Charge.
The form can be used to calculate the risk capital charge associated with the licensed insurer’s Outstanding Claims Provision (OCP) in accordance with Prudential Standard GPS 115 Capital Adequacy: Insurance Risk Capital Charge (GPS 115).
The value of the OCP and the reinsurance recoveries that are included in this form must be measured in accordance with Prudential Standard GPS 310 Audit and Actuarial Reporting and Valuation (GPS 310).
The purpose of this form is to provide detailed information in relation to the following:
This form that relates to Authorised insurance entities and reinsurance entities is required to be subject to audit review and testing.
The scope and nature of audit testing required is outlined in the applicable Auditing and Assurance Standards Board Guidance Statement issued by the Auditing and Assurance Standards Board.
Information provided in the form in respect of a financial year of an insurer forms part of the insurer’s ‘yearly statutory accounts’ within the meaning of section 3 of the Insurance Act 1973 (the Act). This means that:
the completed form for the financial year must be audited by the Appointed Auditor of the insurer (see paragraph 49J(1)(a) of the Act);
the insurer must make such arrangements as to enable the auditor to do this (subsection 49J(2));
the auditor must give the insurer a certificate relating to the completed form (and other completed forms that are part of the insurer’s yearly statutory accounts), which must contain statements of the auditor’s opinion on the matters required by the prudential standards to be dealt with in the certificate (subsection 49J(3)); and
the certificate must be lodged with APRA as provided for in the prudential standards (paragraph 49L(1)(a)), namely by the due date for lodging the form in respect of the financial year for the insurer.
This form is to be completed by:
Definitions
Definitions for data reporting items required by this form have been provided where possible in the instructions under the section headed ‘Specific Instructions’.
Unit of measurement
This form is to be prepared in thousands of Australian dollars (AUD). Amounts denominated in a currency other than Australian currency are to be converted to AUD in accordance with AASB 121 ‘The Effects of Changes in Foreign Exchange Rates’ (AASB 121).
The general requirements of AASB 121 for translation are:
Transactions arising under foreign currency derivative contracts at the reporting date must be prepared in accordance with AASB 139 ‘Financial Instruments: Recognition and Measurement’ (AASB 139). However, those foreign currency derivatives that are not within the scope of AASB 139 ‘(e.g. some foreign currency derivatives that are embedded in other contracts) remain within the scope of AASB 121.
For APRA purposes equity items must be translated using the foreign currency exchange rate at the date of investment or acquisition. Post acquisition changes in equity are required to be translated on the date of the movement.
As foreign currency derivatives are measured at fair value, the currency derivative contracts are translated at the spot rate at the reporting date.
Exchange differences should be recognised in profit and loss in the period which they arise. For foreign currency derivatives, the exchange differences would be recognised immediately in profit and loss if the hedging instrument is a fair value hedge. For derivatives used in a cash flow hedge, the exchange differences should be recognised directly in equity.
The ineffective portion of the exchange differences in all hedges would be recognised in profit and loss.
A foreign operation is defined in AASB 121 as meaning an entity that is a subsidiary, associate, joint venture or branch of a reporting entity, the activities of which are based or conducted in a country or currency other than those of the reporting entity.
Reporting period
Insurers are required to report the information in the reporting form on a quarterly and annual basis.
This form must be lodged for each of the reporting units, within the number of business days after the end of the quarter as set out in Reporting Standard GRS 210.0 Outstanding Claims Provision – Insurance Risk Charge.
Specific instructions
Classes of Business (1)
The classes of insurance business are as follows:
(I). Houseowners/householders (H & H)
This class covers the common H & H policies inclusive of:
Public liability normally attaching to these products are to be separated and included in Public and product liability class of business – item (XIII).
(II). Commercial Motor Vehicle
Motor vehicle insurance (including third party property damage) other than insurance covering vehicles defined below under Domestic motor vehicle. It includes long and medium haul trucks, cranes and special vehicles and policies covering fleets.
(III). Domestic motor vehicle
Motor vehicle insurance (including third party property damage) covering private use motor vehicles including utilities and lorries, motor cycles, private caravans, box and boat trailers and other vehicles not normally covered by business or commercial policies.
(IV). Travel
Insurance against losses associated with travel including loss of baggage and personal effects, losses on flight cancellations and overseas medical costs.
(V). Fire and Industrial Special Risks (ISR)
Includes all policies normally classified as 'Fire' and includes:
Standard policy wordings exist for this type of policy. All policies which contain such standard wordings or where the wording is substantially similar are to be classified as ISR.
(VI). Marine
Includes Marine Hull (including pleasure craft) and Marine Cargo (including sea and inland transit insurance).
(VII). Aviation
Aviation (including aircraft hull and aircraft liability).
(VIII). Mortgage
Insurance against losses arising from the failure of debtors to meet financial obligations to creditors or under which payment of debts is guaranteed. It includes lease guarantee.
(IX). Consumer credit
Insurance to protect a consumer's ability to meet the loan repayments on personal loans and credit card finance in the event of death or loss of income due to injury, illness or unemployment.
(X). Other accident
Includes the following types of insurance:
(XI). Other
All other insurance business not specifically mentioned elsewhere. It includes, for example:
(XII). Compulsory Third Party Motor Vehicle (CTP)
This class consists only of CTP business.
(XIII). Public and Product Liability
(XIV). Professional Indemnity (PI)
PI covers professionals against liability incurred as a result of errors and omissions in performing professional services which has resulted in economic losses suffered by third parties.
Includes Directors' and Officers' liability insurance plus legal expense insurance. Cover for legal expenses is generally included in this type of policy.
(XV). Employers' Liability (EL)
Includes:
The classes of business for companies that provide reinsurance are as follows:
Treaty Proportional: This refers to all forms of quota share and surplus reinsurance written on a treaty reinsurance arrangement where the reinsurer is bound to accept all business ceded by the reinsured subject to the terms and conditions of the pre-agreed treaty wording, and shares in the same proportion of premium and losses of the reinsured.
Treaty Excess of Loss: This refers to all reinsurance arrangements where the reinsurer is bound to accept all business ceded by the reinsured and the reinsurer pays losses only above an agreed predetermined limit (retention) up to an agreed maximum amount.
Facultative Proportional: This refers to non-treaty arrangements where each reinsurance contract is on an individual offer and acceptance basis and the reinsurer shares in the same proportion of premium and losses of the reinsured.
Facultative Excess of Loss: This refers to non-treaty arrangements where each reinsurance contract is on an individual offer and acceptance basis. The reinsurer pays losses only above an agreed predetermined limit (retention) up to an agreed maximum amount.
Reinsurance non-split: This line item classification disclosed under Reinsurance class of business is to be used where it is not possible for the insurer to separately split out all the classes of reinsurance businesses. However as required by GPS 115, where an insurer underwrites an inwards reinsurance contract and is unable to split this business into the classes and types listed in that prudential standard, it must use the highest factors on its outstanding claims provision.
Where an insurer underwrites an inwards reinsurance contract which spans multiple classes and the insurer cannot readily split the contract between classes, the contract must be allocated by using an appropriate method (provided the same method is used for all contracts and for all subsequent periods), including the following methods:
(a) allocate the contract to the category which represents the greatest exposure; or
(b) allocate the contract to the category representing the greatest premium income.
Outstanding Claims Provision
OCP relates to all claims incurred prior to the valuation date, whether or not they have been reported to the insurer. The value of the OCP must include an amount in respect of the expenses that the insurer expects to incur in settling these claims. The value of OCP must not include any Government charges imposed such as levies, duties and taxes.
OCP are to be determined on a prospective basis; both net and gross of reinsurance recoverables and non-reinsurance recoveries.
The valuation of OCP for each class of business must comprise:
(a) a central estimate (refer below); and
(b) a risk margin (refer below) that relates to the inherent uncertainty in the central estimates values.
The valuation of insurance liabilities (i.e. OCP and premiums liabilities) reflects the individual circumstances of the insurer. In any event, the value of insurance liabilities must be the greater of a value that is:
(a) determined on a basis that is intended to value the insurance liabilities of the insurer at a 75 percent level of sufficiency; and
(b) the central estimate plus one half of a standard deviation above the mean for the insurance liabilities of the insurer.
(a) The central estimate
The central estimate is intended to reflect the mean value in the range of possible values for the outcome (that is, the mean of the distribution of probabilistic outcomes). The determination of the central estimate must be based on assumptions as to future experience which reflect the experience and circumstances of the insurer and which are:
Where experience is highly volatile, model parameters estimated from the experience can also be volatile. The central estimate should therefore reflect as closely as possible the likely future experience of the insurer. Judgement may be required to limit the volatility of the assumed parameters to that which is justified in terms of the credibility of the experience data.
The central estimate will be measured as the present value of the future expected payments. This measurement process will involve prospective calculations and modelling techniques, and will require assumptions in respect of the expected future experience, taking into account all factors which are considered to be material to the calculation, including:
The assumptions used must be consistent for the estimation of both OCP and premiums liabilities. Where they are not, the reasons must be documented.
(b) The risk margin
The risk margin is to be valued in accordance with the requirements of GPS 310. The risk margin is the component of the value of OCP that relates to the inherent uncertainty that outcomes will differ from the central estimate. It is aimed at ensuring that the value of the OCP is established at an appropriate and sufficient level. The risk margin does not relate to the risk associated with the underlying assets, including asset-liability mismatch risk.
Risk margins must be determined, for each class of business, and in total, on a basis that reflects the experience of the insurer. In any event, the risk margin must be valued so that the insurance liabilities of the insurer, after any diversification benefit, are not less than the greater of a value that is:
(a) determined on a basis that is intended to value the insurance liabilities of the insurer at a 75 per cent level of sufficiency; and
(b) the central estimate plus one half of a standard deviation above the mean for the insurance liabilities of the insurer.
The risk margins must be determined having regard to the uncertainty of the gross insurance liabilities and to any uncertainty related to the estimate of reinsurance recoverables, expected reinsurance recoveries and non-reinsurance recoveries that are deducted from the estimate of gross insurance liabilities.
The insurer is free to reserve for the OCP in GRF 300.0 Statement of Financial Position at a level different to the amount required by GPS 310. However for the purposes of this form only, the OCP is to be measured and reported in accordance with GPS 310 and disclosed by type of insurance business (direct business and inward reinsurance business).
Note: Any amount of the OCP reported in GRF 300.0 Statement of Financial Position in excess or deficit of the amount required by GPS 310, will be added back to / deducted from net assets in Australia in GRF 110.0 Minimum Capital Requirement for branch insurers and added back to or deducted from Tier 1 capital in GRF 120.0 Determination of Capital Base for all other insurers.
Quarterly actuarial reviews are not required to be conducted specifically for the purposes of completing this form.
For ‘Direct business’ and ‘Reinsurance’ business, amounts are to be reported as follows:
Part 1: Direct business
Includes OCP associated with the insurance business written directly by the insurer.
Note: For the purposes of completing this form, Branch insurers (Category C insurers) are to report the total OCP. This will include amounts inside and outside Australia.
Part 2: Reinsurance business
Include OCP associated with reinsurance business written by the insurer.
Note: For the purposes of completing this form, Branch insurers (Category C insurers) are to report the total OCP. This will include amounts inside and outside Australia.
Outstanding Claims Provision
Gross OCP - Central Estimate (2)
For each line of business, report the central estimate of the OCP that is calculated in accordance with GPS 310.
Gross OCP - Risk Margin (3)
For each line of business, report the risk margin for the OCP that is calculated in accordance with GPS 310.
Gross OCP - Total (4)
Represents the total of the central estimate and risk margin. Do not enter a value as this is automatically calculated by the form.
Non-Reinsurance Recoveries (5)
Non-reinsurance recoveries are amounts that may be recovered under arrangements other than reinsurance arrangements, such as salvage and subrogation.
For each line of business report the non-reinsurance recoveries associated with the OCP.
Reinsurance Recoveries[5] (6)
For each line of business report the reinsurance recoverables associated with the OCP calculated in accordance with GPS 310.
Insurers should recognise reinsurance recoverables, which are calculated in accordance with GPS 310, but which are due from reinsurance arrangements that do not fully meet the reinsurance documentation tests specified in Prudential Standard GPS 112 Capital Adequacy: Measurement of Capital.
Reinsurance recoverables would normally be estimated on the basis of each class of business written by the insurer. However, there are certain forms of reinsurance where recoveries depend on the combined claims experience of several or all classes of business underwritten by the insurer. In such instances, the estimation will be required to factor in all the individual results by class of business covered by the reinsurance arrangement.
OCP - Net of reinsurance and non-reinsurance recoveries
Net OCP - Central Estimate (7)
For each line of business report the central estimate, net of reinsurance and non-reinsurance recoveries, associated with the OCP that is calculated in accordance with GPS 310.
Net OCP - Risk Margin (8)
For each line of business, report the risk margin, net of reinsurance and non-reinsurance recoveries, associated with the OCP that is calculated in accordance with GPS 310.
Total OCP net of RI Recoveries and Non-RI Recoveries (9)
Total OCP net of Reinsurance Recoveries and Non-reinsurance Recoveries is calculated as:
Do not enter a value as this is automatically calculated by the form.
OCP Capital factor % (10)
This column states the insurance risk capital factor applicable to each line of business. The capital factors are taken from GPS 115.
OCP Insurance risk charge (11)
This column represents the insurance risk capital charge applicable to each line of business. The capital charge is calculated on the basis of risk capital factors specified in GPS 115.
The OCP insurance risk charge is automatically calculated; do not enter values. The total of this column for direct business and reinsurance business is included in the calculation of the minimum capital requirement for the insurer.
Net OCL per GRF 300.0 (12)Include in this item the value of net outstanding claims liabilities that are recognised in GRF 300.0 Statement of Financial Position. This is calculated on a net basis as per the following:
Calculate the total OCL net of Reinsurance and Non-Reinsurance Recoveries (including input tax credits) as reported in GRF 300.0 Statement of Financial Position (GRF 300.0) and GRF 301.0 Reinsurance Assets and Risk Charge (GRF 301.0) as:
OCP Surplus / (Deficit) (13)
This column is automatically calculated by the form and represents column (12) ‘Net OCL per GRF 300.0’ less column (9) ‘Total OCP net of RI Recoveries & Non-RI Recoveries’.
For all insurers except category C insurers, the difference (whether positive or negative) should be reported in item 1.1.4 ‘OCP surplus / (deficit) per GRF 210.0 Outstanding Claims Provision - Insurance Risk Charge’ of GRF 120.0 Determination of Capital Base.
For category C insurers the difference (whether positive or negative) should be reported in item 29.1 ‘OCP surplus / (deficit) inside Australia on form GRF 300.0 Statement of financial Position (B).
This instruction guide is designed to assist in the completion of GRF 210.0 Outstanding Claims Provision – Insurance Risk Charge.
The form can be used to calculate the risk capital charge associated with the licensed insurer’s Outstanding Claims Provision (OCP) in accordance with Prudential Standard GPS 115 Capital Adequacy: Insurance Risk Capital Charge (GPS 115).
The value of the OCP and the reinsurance recoveries that are included in this form must be measured in accordance with Prudential Standard GPS 310 Audit and Actuarial Reporting and Valuation (GPS 310).
The purpose of this form is to provide detailed information in relation to the following:
This form that relates to Authorised insurance entities and reinsurance entities is required to be subject to audit review and testing.
The scope and nature of audit testing required is outlined in the applicable Auditing and Assurance Standards Board Guidance Statement issued by the Auditing and Assurance Standards Board.
Information provided in the form in respect of a financial year of an insurer forms part of the insurer’s ‘yearly statutory accounts’ within the meaning of section 3 of the Insurance Act 1973 (the Act). This means that:
the completed form for the financial year must be audited by the Appointed Auditor of the insurer (see paragraph 49J(1)(a) of the Act);
the insurer must make such arrangements as to enable the auditor to do this (subsection 49J(2));
the auditor must give the insurer a certificate relating to the completed form (and other completed forms that are part of the insurer’s yearly statutory accounts), which must contain statements of the auditor’s opinion on the matters required by the prudential standards to be dealt with in the certificate (subsection 49J(3)); and
the certificate must be lodged with APRA as provided for in the prudential standards (paragraph 49L(1)(a)), namely by the due date for lodging the form in respect of the financial year for the insurer.
This form is to be completed by:
Definitions
Definitions for data reporting items required by this form have been provided where possible in the instructions under the section headed ‘Specific Instructions’.
Unit of measurement
This form is to be prepared in thousands of Australian dollars (AUD). Amounts denominated in a currency other than Australian currency are to be converted to AUD in accordance with AASB 121 ‘The Effects of Changes in Foreign Exchange Rates’ (AASB 121).
The general requirements of AASB 121 for translation are:
Transactions arising under foreign currency derivative contracts at the reporting date must be prepared in accordance with AASB 139 ‘Financial Instruments: Recognition and Measurement’ (AASB 139). However, those foreign currency derivatives that are not within the scope of AASB 139 ‘(e.g. some foreign currency derivatives that are embedded in other contracts) remain within the scope of AASB 121.
For APRA purposes equity items must be translated using the foreign currency exchange rate at the date of investment or acquisition. Post acquisition changes in equity are required to be translated on the date of the movement.
As foreign currency derivatives are measured at fair value, the currency derivative contracts are translated at the spot rate at the reporting date.
Exchange differences should be recognised in profit and loss in the period which they arise. For foreign currency derivatives, the exchange differences would be recognised immediately in profit and loss if the hedging instrument is a fair value hedge. For derivatives used in a cash flow hedge, the exchange differences should be recognised directly in equity.
The ineffective portion of the exchange differences in all hedges would be recognised in profit and loss.
A foreign operation is defined in AASB 121 as meaning an entity that is a subsidiary, associate, joint venture or branch of a reporting entity, the activities of which are based or conducted in a country or currency other than those of the reporting entity.
Reporting period
Insurers are required to report the information in the reporting form on a quarterly and annual basis.
This form must be lodged for each of the reporting units, within the number of business days after the end of the quarter as set out in Reporting Standard GRS 210.0 Outstanding Claims Provision – Insurance Risk Charge.
Specific instructions
Classes of Business (1)
The classes of insurance business are as follows:
(I). Houseowners/householders (H & H)
This class covers the common H & H policies inclusive of:
Public liability normally attaching to these products are to be separated and included in Public and product liability class of business – item (XIII).
(II). Commercial Motor Vehicle
Motor vehicle insurance (including third party property damage) other than insurance covering vehicles defined below under Domestic motor vehicle. It includes long and medium haul trucks, cranes and special vehicles and policies covering fleets.
(III). Domestic motor vehicle
Motor vehicle insurance (including third party property damage) covering private use motor vehicles including utilities and lorries, motor cycles, private caravans, box and boat trailers and other vehicles not normally covered by business or commercial policies.
(IV). Travel
Insurance against losses associated with travel including loss of baggage and personal effects, losses on flight cancellations and overseas medical costs.
(V). Fire and Industrial Special Risks (ISR)
Includes all policies normally classified as 'Fire' and includes:
Standard policy wordings exist for this type of policy. All policies which contain such standard wordings or where the wording is substantially similar are to be classified as ISR.
(VI). Marine
Includes Marine Hull (including pleasure craft) and Marine Cargo (including sea and inland transit insurance).
(VII). Aviation
Aviation (including aircraft hull and aircraft liability).
(VIII). Mortgage
Insurance against losses arising from the failure of debtors to meet financial obligations to creditors or under which payment of debts is guaranteed. It includes lease guarantee.
(IX). Consumer credit
Insurance to protect a consumer's ability to meet the loan repayments on personal loans and credit card finance in the event of death or loss of income due to injury, illness or unemployment.
(X). Other accident
Includes the following types of insurance:
(XI). Other
All other insurance business not specifically mentioned elsewhere. It includes, for example:
(XII). Compulsory Third Party Motor Vehicle (CTP)
This class consists only of CTP business.
(XIII). Public and Product Liability
(XIV). Professional Indemnity (PI)
PI covers professionals against liability incurred as a result of errors and omissions in performing professional services which has resulted in economic losses suffered by third parties.
Includes Directors' and Officers' liability insurance plus legal expense insurance. Cover for legal expenses is generally included in this type of policy.
(XV). Employers' Liability (EL)
Includes:
The classes of business for companies that provide reinsurance are as follows:
Treaty Proportional: This refers to all forms of quota share and surplus reinsurance written on a treaty reinsurance arrangement where the reinsurer is bound to accept all business ceded by the reinsured subject to the terms and conditions of the pre-agreed treaty wording, and shares in the same proportion of premium and losses of the reinsured.
Treaty Excess of Loss: This refers to all reinsurance arrangements where the reinsurer is bound to accept all business ceded by the reinsured and the reinsurer pays losses only above an agreed predetermined limit (retention) up to an agreed maximum amount.
Facultative Proportional: This refers to non-treaty arrangements where each reinsurance contract is on an individual offer and acceptance basis and the reinsurer shares in the same proportion of premium and losses of the reinsured.
Facultative Excess of Loss: This refers to non-treaty arrangements where each reinsurance contract is on an individual offer and acceptance basis. The reinsurer pays losses only above an agreed predetermined limit (retention) up to an agreed maximum amount.
Reinsurance non-split: This line item classification disclosed under Reinsurance class of business is to be used where it is not possible for the insurer to separately split out all the classes of reinsurance businesses. However as required by GPS 115, where an insurer underwrites an inwards reinsurance contract and is unable to split this business into the classes and types listed in that prudential standard, it must use the highest factors on its outstanding claims provision.
Where an insurer underwrites an inwards reinsurance contract which spans multiple classes and the insurer cannot readily split the contract between classes, the contract must be allocated by using an appropriate method (provided the same method is used for all contracts and for all subsequent periods), including the following methods:
(a) allocate the contract to the category which represents the greatest exposure; or
(b) allocate the contract to the category representing the greatest premium income.
Outstanding Claims Provision
OCP relates to all claims incurred prior to the valuation date, whether or not they have been reported to the insurer. The value of the OCP must include an amount in respect of the expenses that the insurer expects to incur in settling these claims. The value of OCP must not include any Government charges imposed such as levies, duties and taxes.
OCP are to be determined on a prospective basis; both net and gross of reinsurance recoverables and non-reinsurance recoveries.
The valuation of OCP for each class of business must comprise:
(a) a central estimate (refer below); and
(b) a risk margin (refer below) that relates to the inherent uncertainty in the central estimates values.
The valuation of insurance liabilities (i.e. OCP and premiums liabilities) reflects the individual circumstances of the insurer. In any event, the value of insurance liabilities must be the greater of a value that is:
(a) determined on a basis that is intended to value the insurance liabilities of the insurer at a 75 percent level of sufficiency; and
(b) the central estimate plus one half of a standard deviation above the mean for the insurance liabilities of the insurer.
(a) The central estimate
The central estimate is intended to reflect the mean value in the range of possible values for the outcome (that is, the mean of the distribution of probabilistic outcomes). The determination of the central estimate must be based on assumptions as to future experience which reflect the experience and circumstances of the insurer and which are:
Where experience is highly volatile, model parameters estimated from the experience can also be volatile. The central estimate should therefore reflect as closely as possible the likely future experience of the insurer. Judgement may be required to limit the volatility of the assumed parameters to that which is justified in terms of the credibility of the experience data.
The central estimate will be measured as the present value of the future expected payments. This measurement process will involve prospective calculations and modelling techniques, and will require assumptions in respect of the expected future experience, taking into account all factors which are considered to be material to the calculation, including:
The assumptions used must be consistent for the estimation of both OCP and premiums liabilities. Where they are not, the reasons must be documented.
(b) The risk margin
The risk margin is to be valued in accordance with the requirements of GPS 310. The risk margin is the component of the value of OCP that relates to the inherent uncertainty that outcomes will differ from the central estimate. It is aimed at ensuring that the value of the OCP is established at an appropriate and sufficient level. The risk margin does not relate to the risk associated with the underlying assets, including asset-liability mismatch risk.
Risk margins must be determined, for each class of business, and in total, on a basis that reflects the experience of the insurer. In any event, the risk margin must be valued so that the insurance liabilities of the insurer, after any diversification benefit, are not less than the greater of a value that is:
(a) determined on a basis that is intended to value the insurance liabilities of the insurer at a 75 per cent level of sufficiency; and
(b) the central estimate plus one half of a standard deviation above the mean for the insurance liabilities of the insurer.
The risk margins must be determined having regard to the uncertainty of the gross insurance liabilities and to any uncertainty related to the estimate of reinsurance recoverables, expected reinsurance recoveries and non-reinsurance recoveries that are deducted from the estimate of gross insurance liabilities.
The insurer is free to reserve for the OCP in GRF 300.0 Statement of Financial Position at a level different to the amount required by GPS 310. However for the purposes of this form only, the OCP is to be measured and reported in accordance with GPS 310 and disclosed by type of insurance business (direct business and inward reinsurance business).
Note: Any amount of the OCP reported in GRF 300.0 Statement of Financial Position in excess or deficit of the amount required by GPS 310, will be added back to / deducted from net assets in Australia in GRF 110.0 Minimum Capital Requirement for branch insurers and added back to or deducted from Tier 1 capital in GRF 120.0 Determination of Capital Base for all other insurers.
Quarterly actuarial reviews are not required to be conducted specifically for the purposes of completing this form.
For ‘Direct business’ and ‘Reinsurance’ business, amounts are to be reported as follows:
Part 1: Direct business
Includes OCP associated with the insurance business written directly by the insurer.
Note: For the purposes of completing this form, Branch insurers (Category C insurers) are to report the total OCP. This will include amounts inside and outside Australia.
Part 2: Reinsurance business
Include OCP associated with reinsurance business written by the insurer.
Note: For the purposes of completing this form, Branch insurers (Category C insurers) are to report the total OCP. This will include amounts inside and outside Australia.
Outstanding Claims Provision
Gross OCP - Central Estimate (2)
For each line of business, report the central estimate of the OCP that is calculated in accordance with GPS 310.
Gross OCP - Risk Margin (3)
For each line of business, report the risk margin for the OCP that is calculated in accordance with GPS 310.
Gross OCP - Total (4)
Represents the total of the central estimate and risk margin. Do not enter a value as this is automatically calculated by the form.
Non-Reinsurance Recoveries (5)
Non-reinsurance recoveries are amounts that may be recovered under arrangements other than reinsurance arrangements, such as salvage and subrogation.
For each line of business report the non-reinsurance recoveries associated with the OCP.
Reinsurance Recoveries[5] (6)
For each line of business report the reinsurance recoverables associated with the OCP calculated in accordance with GPS 310.
Insurers should recognise reinsurance recoverables, which are calculated in accordance with GPS 310, but which are due from reinsurance arrangements that do not fully meet the reinsurance documentation tests specified in Prudential Standard GPS 112 Capital Adequacy: Measurement of Capital.
Reinsurance recoverables would normally be estimated on the basis of each class of business written by the insurer. However, there are certain forms of reinsurance where recoveries depend on the combined claims experience of several or all classes of business underwritten by the insurer. In such instances, the estimation will be required to factor in all the individual results by class of business covered by the reinsurance arrangement.
OCP - Net of reinsurance and non-reinsurance recoveries
Net OCP - Central Estimate (7)
For each line of business report the central estimate, net of reinsurance and non-reinsurance recoveries, associated with the OCP that is calculated in accordance with GPS 310.
Net OCP - Risk Margin (8)
For each line of business, report the risk margin, net of reinsurance and non-reinsurance recoveries, associated with the OCP that is calculated in accordance with GPS 310.
Total OCP net of RI Recoveries and Non-RI Recoveries (9)
Total OCP net of Reinsurance Recoveries and Non-reinsurance Recoveries is calculated as:
Do not enter a value as this is automatically calculated by the form.
OCP Capital factor % (10)
This column states the insurance risk capital factor applicable to each line of business. The capital factors are taken from GPS 115.
OCP Insurance risk charge (11)
This column represents the insurance risk capital charge applicable to each line of business. The capital charge is calculated on the basis of risk capital factors specified in GPS 115.
The OCP insurance risk charge is automatically calculated; do not enter values. The total of this column for direct business and reinsurance business is included in the calculation of the minimum capital requirement for the insurer.
Net OCL per GRF 300.0 (12)Include in this item the value of net outstanding claims liabilities that are recognised in GRF 300.0 Statement of Financial Position. This is calculated on a net basis as per the following:
Calculate the total OCL net of Reinsurance and Non-Reinsurance Recoveries (including input tax credits) as reported in GRF 300.0 Statement of Financial Position (GRF 300.0) and GRF 301.0 Reinsurance Assets and Risk Charge (GRF 301.0) as:
OCP Surplus / (Deficit) (13)
This column is automatically calculated by the form and represents column (12) ‘Net OCL per GRF 300.0’ less column (9) ‘Total OCP net of RI Recoveries & Non-RI Recoveries’.
For all insurers except category C insurers, the difference (whether positive or negative) should be reported in item 1.1.4 ‘OCP surplus / (deficit) per GRF 210.0 Outstanding Claims Provision - Insurance Risk Charge’ of GRF 120.0 Determination of Capital Base.
For category C insurers the difference (whether positive or negative) should be reported in item 29.1 ‘OCP surplus / (deficit) inside Australia on form GRF 300.0 Statement of financial Position (B).
Sourced from the Federal Register of Legislation (legislation.gov.au), CC BY 4.0.
Schedule
Reporting Standard GRS 210 (2010) Insurance Risk Charge comprises the 46 pages commencing on the next page.
This reporting standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001 (the Collection of Data Act). It requires general insurers (insurers), including foreign general insurers operating in Australia through branch operations (foreign insurers), to report to APRA, generally on a quarterly and annual basis, in relation to their outstanding claims provision and premiums liabilities.
This reporting standard outlines the overall requirements for the provision of this information to APRA. It should be read in conjunction with:
(a) in electronic form using the ‘Direct to APRA’ application, applying one of the electronic submission mechanisms under that application; or
(b) by manually completing Forms GRF 210.0 and GRF 210.1 on paper and mailing the completed forms to APRA’s head office at Level 26, 400 George Street, Sydney, New South Wales.
Where the information is submitted by means of an agent to whom the insurer has outsourced the function of providing the information on the insurer’s behalf, the agent may only provide the information in accordance with subparagraph 4(b) if the agent has contacted APRA and advised that the agent cannot submit the information in electronic form under subparagraph 4(a).
Note: the Direct to APRA application software and paper forms may be obtained from APRA.
(a) in respect of each quarter based on the financial year (within the meaning of the Corporations Act 2001) of the insurer; and
(b) in respect of each financial year (within the meaning of the Corporations Act 2001) of the insurer.
Note: The annual information required by paragraph 3 read with subparagraph 5(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 auditor 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.
(a) more frequently (if, having regard to the particular circumstances of the insurer, APRA considers it necessary or desirable to obtain information more frequently for the purposes of the prudential supervision of the insurer); or
(b) less frequently (if, having regard to the particular circumstances of the insurer and the extent to which it requires prudential supervision, APRA considers it unnecessary to require the insurer to provide the information as frequently as provided by subparagraph 5(a) or (b)).
(a) in the case of the quarterly information required by subparagraph 5(a) – 20 business days after the end of the reporting period to which the information relates; and
(b) in the case of the annual information required by subparagraph 5(b) – 4 months after the end of the reporting period to which the information relates.
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 required by paragraph 3 read with subparagraph 5(b) must be provided to APRA by the time specified in subparagraph 7(b) of this reporting standard (unless an extension is granted under paragraph 8).
The information provided by an insurer under this reporting standard must be the product of processes and controls that have been reviewed and tested by the appointed auditor of the insurer. This will require the auditor to review and test the systems, processes and controls supporting the reporting of the information to ensure that they produce accurate data and are otherwise reliable. This review and testing must be done on an annual basis or more frequently if necessary to enable the appointed auditor to form an opinion on the accuracy and reliability of the data.
The information provided by an insurer under this reporting standard must be subject to 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.
(a) under subparagraph 4(a), the officer must digitally sign, authorise and encrypt the information (for which purpose APRA’s certificate authority will issue digital certificates, for use with the ‘Direct to APRA’ application, to officers of the insurer who have authority from the insurer to transmit data to APRA); or
(b) under subparagraph 4(b), the completed form must be signed in accordance with paragraph 13.
(a) obtain from the agent paper copies of the completed forms as provided to APRA (under either subparagraph 4(a) or (b)); and
(b) cause the paper copies to be signed in accordance with paragraph 13; and
(c) lodge the signed paper copies with APRA by mailing the completed forms to APRA’s head office at Level 26, 400 George Street, Sydney, New South Wales, by the relevant due date (unless APRA, in writing, waives the requirement in relation to the insurer to lodge the signed paper copies with APRA).
Note: APRA may, for example, decide to waive the requirement under subparagraph 12(c) where an insurer has undertaken to retain the signed copies of the completed form for an agreed period of time.
(a) the Principal Executive Officer of the insurer; or
(b) the Chief Financial Officer of the insurer (whatever his or her official title may be).
APRA may make minor variations to the instructions to a form, to clarify their application to the form provided it does not involve changing any substantive requirement in the form or instructions.
If APRA makes such a variation it must notify insurers of this in writing.
Transition
Interpretation
appointed auditor means an auditor appointed under paragraph 39(1)(a) of the Insurance Act;
business days means ordinary business days, exclusive of Saturdays, Sundays and public holidays;
capital standards means the prudential standards which relate to capital adequacy as defined in Prudential Standard GPS 001 Definitions;
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.
Insurance Act means the Insurance Act 1973;
insurer means a general insurer within the meaning 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.
reporting period means a period mentioned in subparagraph 5(a) or (b) or, if applicable, paragraph 6.
This reporting standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001 (the Collection of Data Act). It requires general insurers (insurers), including foreign general insurers operating in Australia through branch operations (foreign insurers), to report to APRA, generally on a quarterly and annual basis, in relation to their outstanding claims provision and premiums liabilities.
This reporting standard outlines the overall requirements for the provision of this information to APRA. It should be read in conjunction with:
(a) in electronic form using the ‘Direct to APRA’ application, applying one of the electronic submission mechanisms under that application; or
(b) by manually completing Forms GRF 210.0 and GRF 210.1 on paper and mailing the completed forms to APRA’s head office at Level 26, 400 George Street, Sydney, New South Wales.
Where the information is submitted by means of an agent to whom the insurer has outsourced the function of providing the information on the insurer’s behalf, the agent may only provide the information in accordance with subparagraph 4(b) if the agent has contacted APRA and advised that the agent cannot submit the information in electronic form under subparagraph 4(a).
Note: the Direct to APRA application software and paper forms may be obtained from APRA.
(a) in respect of each quarter based on the financial year (within the meaning of the Corporations Act 2001) of the insurer; and
(b) in respect of each financial year (within the meaning of the Corporations Act 2001) of the insurer.
Note: The annual information required by paragraph 3 read with subparagraph 5(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 auditor 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.
(a) more frequently (if, having regard to the particular circumstances of the insurer, APRA considers it necessary or desirable to obtain information more frequently for the purposes of the prudential supervision of the insurer); or
(b) less frequently (if, having regard to the particular circumstances of the insurer and the extent to which it requires prudential supervision, APRA considers it unnecessary to require the insurer to provide the information as frequently as provided by subparagraph 5(a) or (b)).
(a) in the case of the quarterly information required by subparagraph 5(a) – 20 business days after the end of the reporting period to which the information relates; and
(b) in the case of the annual information required by subparagraph 5(b) – 4 months after the end
This is an opening excerpt, not the complete document.