Premiums Received - cashflow basis (as aPremiums Received - cashflow basis (as a proxy the basis required by AASB 107 ‘Cash Flow Statements’ can be used)

Premiums Received - cashflow basis (as a proxy the basis required by AASB 107 ‘Cash Flow Statements’ can be used)

This is the amount of premiums actually received over the reporting period (on a year to date basis). Do not include premium revenue that has been included as revenue on an accrual basis. It is to be reported in aggregate for direct written business and reinsurance business.

This relates to all premiums received on a cashflow basis in the current financial year, regardless of the financial year in which the premium may have been recognised as revenue (i.e. a prior financial year).

Reinsurance Expense

Recognition of reinsurance expenses will vary according to the type of reinsurance contract:

Proportional reinsurance (treaty) and all facultative

Premium ceded to the reinsurer(s) is recognised as an expense by the direct insurer on the date of acceptance (date bound) of the underlying insurance contract by the direct insurer.

Excess of loss reinsurance (treaty)

The recognition of outwards reinsurance expense depends on the basis of the cover being either on a ‘losses occurring during the period of reinsurance’ basis or ‘risks attaching during the period of reinsurance’.

Loss occurring during the period of reinsurance: The majority of excess of loss and catastrophe reinsurance is based on a ‘losses occurring during the period of reinsurance’ basis. Thus, the reinsurance will provide cover for risks that have been accepted in the prior period and to risks that are accepted and attach in the current period of the reinsurance contract. In case the risk profile of the insurer is evenly distributed throughout the year, an insurer must recognise 50 per cent of the risk excess of loss reinsurance expense in the current period. The reinsurance expense for the remaining 50 per cent is to be recognised at the mid point of the period for the reinsurance cover for the remaining portion of the current year. Where the risk profile of the insurer is not evenly distributed throughout the year, with material peaks and troughs throughout the year, the insurer will need to recognise the apportionment of the reinsurance expense on the same business pattern as their risk portfolio. For seasonal insurers, with all policies incepting on the one date, all reinsurance expense will need to be recognised from the date of acceptance by the reinsurer of the reinsurance contract.

Risk attaching during the period of reinsurance: For these reinsurance contracts, the full amount of the excess of loss reinsurance expense is to be recognised from the date of acceptance of the reinsurance by the reinsurer. The minimum and deposit premium for the full period of the reinsurance that is payable to the reinsurer is to be recognised.

Where payments under a reinsurance contract extend beyond the current year of cover, reinsurance expense is to be discounted using similar discount rates as required in measuring insurance liabilities in accordance with GPS 310 Audit and Actuarial Reporting and Valuation.