Management actions

1. When determining the impact of losses from the FER, a private health insurer may make allowance for the actions that it would expect to take in response to the stresses, subject to the restrictions described in paragraphs 29 to 33.
2. Management actions may include, but are not limited to:
   1. changing coverage;
   2. changing other business expenses;
   3. closing products; and
   4. migrating polices.
3. The allowances for management actions must be appropriate and justifiable. Any contractual guarantees must be taken into account in determining the management actions that would be applied.
4. Management actions cannot be assumed to occur within nine months of the reporting date. The nine month period must be extended if it is not sufficient time to allow the insurer to identify the event, assess the extent of the change, align to the insurer’s risk appetite, implement the actions and for the actions to take effect.
5. Where a private health insurer proposes to change products, the timeframes must include informing an adult insured under each policy about proposed changes a ‘reasonable time before the change takes effect’ as outlined in 93-20 (2) of the PHI Act.
6. Following the implementation of any management action, any estimated insurance profits on HIB or HRIB cannot be used to reduce the FER. That is, any insurance profits forecast after management action cannot offset prior losses.