Capital Adequacy requirementCapital Adequacy requirement

Capital Adequacy requirement

9. The private health insurer must ensure that, at all times, the value of the assets of its health benefits fund is not less than the amount calculated under subparagraph (a) and also not less than the second amount calculated under subparagraph (b), where:
(a) the amount is the sum of that fund’s:

(i) prudent liabilities amount (see paragraphs 12 to 18); and

(ii) stress test amount (see paragraphs 19 to 25); and

(iii) operational risk amount (see paragraph 26); and

(iv) any capital adequacy supervisory adjustment amount (see paragraphs 27 to 30); and

(v) less any subordinated debt; and

(b) the second amount is the sum of that fund’s:
(i) prudent liabilities amount; and
(ii) capital adequacy maximum default loss amount (see paragraphs 31 to 32); and
(iii) any capital adequacy supervisory adjustment amount; and
(iv) less any subordinated debt.
10. Any amount or value that is required to be calculated for the purposes of this Prudential Standard must be calculated in accordance with Australian Accounting Standards, unless otherwise indicated.
11. All estimates, forecasts and calculations in this Prudential Standard must:
(a) be made having regard to reasonably available statistics and other relevant information; and
(b) not be deliberately or carelessly overstated or understated.