ISRISR

ISR

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), 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 (CCI)

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:

• Miscellaneous accident (involving cash in transit, theft, loss of money);
• All risks (baggage, sporting equipment, guns);
• Engineering when not part of ISR or Fire policy;
• Plate glass when not part of packaged policy (e.g. houseowners /householders)
• Guarantee (Insurance Bonds);
• Live Stock;
• Pluvius; and
• Sickness and Accident (which provides stated benefits where the insured is killed or suffers loss of specific parts of the body or is prevented from carrying out the insured’s normal occupation. In addition, regular benefits may be paid over a short period of time (typically less than 3 years), noting that continuous disability policies are now considered to be Life Insurance Policies and should not be provided by General Insurance companies).

(XI). Other

All other insurance business not specifically mentioned elsewhere. It includes, for example:

• All guarantees (e.g. fidelity Guarantee)
• Trade Credit;
• Extended Warranty (includes insurance by a third party for a period in excess of the manufacturer's or seller’s normal warranty);
• Kidnap and Ransom; and
• Contingency.

(XII). Compulsory Third Party Motor Vehicle (CTP)

This class consists only of CTP business.

(XIII). Public and Product Liability

• Public Liability covers legal liability to the public in respect of bodily injury or property damage arising out of the operation of the insured's business. Product Liability includes policies that provide for compensation for loss and or injury caused by, or as a result of, the use of goods and also environmental clean-up caused by pollution spills where not covered by Fire and ISR policies.
• Also will include builders warranty insurance.
• Includes public liability attaching to houseowners/householders policies.

(XIV). Professional Indemnity (PI)

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:

• Workers' compensation;
• Seamen's compensation; and
• Domestic workers compensation.

2. Reinsurance Business

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.

Where an insurer writes inwards reinsurance which spans multiple classes and the insurer cannot readily split the contract between classes, the contract must be allocated using an appropriate method, 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.

An insurer that underwrites inwards reinsurance is free to choose which of the above methods it uses, or may use another appropriate method, provided the same method is used for all contracts and all subsequent periods.

Below is an explanation of the terms in the form. Note that any reference to gross means net of non-reinsurance recoveries and gross of reinsurance recoveries. A reference to ‘net’ means net of both reinsurance and non-reinsurance recoveries. In some instances the insurer’s reinsurance arrangements will be complicated (for example multi-year reinsurance treaties, aggregate deductibles, reinsurance treaties across multiple lines of business etc) and as a result insurers may need to apportion the reinsurance premiums and recoveries. Material apportionments must be either prepared by or reviewed by the insurer’s Appointed Actuary.

Fields that are to be completed on a cumulative basis:

• Gross and net earned and written premium
• Number of claims reported
• Gross and net claim payments

Fields that are NOT to be completed on a cumulative basis:

• Number of claims outstanding
• Gross and net case estimates
• Gross and net IBNR/IBNER

(1) Gross and net premium

Earned premium is to be reported both gross and net of reinsurance expense for each accident year. Gross and net premium earned is to be reported in this form in accordance with AASB 1023 ‘General Insurance Contracts’. Written premium is to be reported both gross and net of reinsurance expense for each underwriting year.

The amount reported for ‘Current Accident/Underwriting Year’ will generally be the same reported for the ‘Accident/Underwriting Year – 1 Year Previous’ in the following financial year. For example:

However, it is acknowledged that there may be some premium adjustments made after the insurer reports the ‘Current Accident/Underwriting Year’ data and as a result there may be some movement in the premium figures reported at later dates.

Premium revenue is to take into account the following:

• Do not include amounts collected on behalf of third parties i.e. government stamp duty and taxes;
• Levies charged to customers are to be included such as fire service levies;
• Deduct returned premiums and rebates;
• Premiums are to be brought to account from the attachment date;
• For installment premium policies, the amount of the annualised premium is to be reported; and
• Premium revenue must be shown both gross and net of reinsurance expense.

(2) Number of claims reported

Include the cumulative total gross number of claims reported for each class of business by accident/underwriting year at the end of the reporting period. This column is not applicable for proportional reinsurance business, as this information is generally not known.

(3) Number of claims outstanding

Include the actuarial gross central estimate of the number of claims outstanding for each class of business by accident/underwriting year as at the end of the reporting period. This column may not be applicable for classes valued using actuarial techniques which do not estimate numbers of claims outstanding.

(4) Gross and net claim payments

Report the amount of gross and net claim payments attributable to each accident/underwriting year on a cumulative basis, for classes of direct and reinsurance business. Gross claim payments must be reported net of non-reinsurance recoveries. Net claim payments must be reported net of reinsurance and non-reinsurance recoveries. In both cases include recoveries that have been received or are expected to be received only in relation to claims already paid.

(5) Gross and net case estimate

Gross and net case estimates are to be disclosed by type of business. This relates to the gross and net case estimates included in the Outstanding Claims Provision as at the end of the development year for the specified accident/underwriting year.

For the purposes of this form, case estimates must be reported:

• As the balance outstanding at the end of the year.
• Net of non-reinsurance recoveries (for gross case estimates).
• Net of reinsurance and non-reinsurance recoveries (for net case estimates).
• Excluding IBNR/IBNER, claims handling expenses and risk margins.

(6) Gross and net IBNR/IBNER

Gross and net IBNR/IBNER is to be disclosed by type of business. This relates to the IBNR/IBNER included in the Outstanding Claims Provision as at the end of the development year for the specified accident/underwriting year.

For the purposes of this form, the IBNR/IBNER must be reported:

• As the balance outstanding at the end of the year.
• Inflated and undiscounted.
• Net of non-reinsurance recoveries (for gross IBNR/IBNER).
• Net of reinsurance and non-reinsurance recoveries (for net IBNR/IBNER).
• Excluding claims handling expenses.
• As the central estimate only; that is do not include a risk margin.

(7) Total gross and net ultimate cost (inflated & undiscounted)

This is automatically calculated by the form and represents the sum of (respectively for gross and net):

• Claim payments;
• Case estimates; and
• IBNR/IBNER.

(8) Gross and net outstanding claims (inflated and undiscounted)

This is automatically calculated by the form (respectively for gross and net) as:

• Total ultimate cost (inflated & undiscounted);

Less:

• Claim payments.

(9) Discounting on net outstanding claims

Include the impact of discounting the net actuarial central estimate of outstanding claims (excluding claims handling expenses). This data is only required as an aggregate total for direct business and reinsurance business.

(10) Claims handling expenses on net outstanding claims

Include the claims handling expense allowance in the net actuarial central estimate of outstanding claims. This data is only required as an aggregate total for direct business and reinsurance business.

(11) APRA Risk Margin on net outstanding claims

Include the APRA risk margins (75% probability of sufficiency including diversification benefits) included in the APRA net Outstanding Claims Provision. This data is only required as an aggregate total for direct business and reinsurance business.

(12) APRA net OCP

This column is automatically calculated as:

• Net outstanding claims (inflated & undiscounted);

Less:

• Discount on net outstanding claims;

Plus:

• Claims handling expenses on net outstanding claims;

Plus:

• APRA Risk Margin on net outstanding claims.