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Financial Sector (Collection of Data) (reporting standard) determination No. 74 of 2023
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| Adjusted PML | This is the PML after allowing for the adjustment to the PML. This is automatically calculated as:PMLless:adjustment to the PML |
|---|---|
| Adjustment to the PML | For a Level 2 insurance group with an LMI that is no longer writing new business (i.e. in run-off), the sum insured is expected to decrease over the three-year scenario and it may be appropriate for an LMI in run-off to adjust its PML downwards. The methodology for adjusting an LMI’s PML in a run-off situation must be approved by APRA and documented in the LMI’s reinsurance management strategy. |
| Adjustments to LMI Concentration Risk Charge as approved by APRA | If APRA is of the view that the Standard Method for calculating the LMI Concentration Risk Charge component of the prescribed capital amount does not produce an appropriate outcome in respect of a Level 2 insurance group, or a Level 2 insurance group has used inappropriate judgement or estimation in calculating the LMI Concentration Risk Charge, APRA may adjust the LMI Concentration Risk Charge calculation for that Level 2 insurance group. |
| Allowable reinsurance | This is the lesser of available reinsurance and 60 per cent of the adjusted PML. |
| Available reinsurance | The methodology for calculating available reinsurance is detailed in Attachment A of GPS 116. |