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Financial Sector (Collection of Data) (reporting standard) determination No. 74 of 2023
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| Natural perils horizontal requirement (NP HR) | The natural perils horizontal requirement (NP HR) is calculated as the greater of:H3 requirement; orH4 requirementless:PL offset. |
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| Natural perils vertical requirement (NP VR) | The natural perils vertical requirement (NP VR) is calculated as the greater of:NP PML less NP reinsurance recoverables; orNet whole-of-portfolio loss;less:NP reinstatement premiumsplus:NP reinstatement costless:other adjustments. |
| Net premium liability deduction | In determining the LMI Concentration Risk Charge, this is the value of the deduction from the PML, allowed under GPS 116, for net PL of the LMI that relate to an economic downturn. |
| Net whole-of-portfolio loss | Net whole-of-portfolio loss is the net loss arising from the occurrence of a single event where that net loss is not less than the whole-of-portfolio annual net loss with a 0.5 per cent probability of occurrence. |
| NP PML | NP PML is the gross loss arising from the occurrence of a single event, where that loss is not less than the whole-of-portfolio annual loss with a 0.5 per cent probability of occurrence. |
| NP reinstatement cost | NP reinstatement cost is the cost (if any) of reinstating all catastrophe reinsurance cover relating to the reinsurance recoverables determined. In determining this cost, if the Level 2 insurance group does not have contractually agreed rates for the reinsurance cover, the Level 2 insurance group must estimate the cost based on current reinsurance market conditions. The amount must not be less than the full original cost of the cover with no deduction for the expiry of time since the inception of the reinsurance arrangements unless the Level 2 insurance group is able to demonstrate to APRA that the amount materially overstates the cost that would prevail. |
| NP reinstatement premiums | NP reinstatement premiums are applicable to Level 2 insurance groups that write reinsurance and may receive inwards reinstatement premiums from cedants as a result of the event that gives rise to its NP PML, or the net whole-of-portfolio loss. NP reinstatement premiums must only be included in NP VR if the reinsurance contract specifically stipulates that offsetting with the cedant will occur at the time of the payment of the reinsurance claim. |
| NP reinsurance recoverables | NP reinsurance recoverables is the level of potential reinsurance recoverables should there be the occurrence of the event that gives rise to NP PML. This amount must not include any amounts due from aggregate reinsurance cover. |