Document ID: chunk:federal_register_of_legislation:F2023L00607:front:0:p9
Version: federal_register_of_legislation:F2023L00607
Segment Type: other
Provision Reference: 
Character Range: 23736–27025

net of any provisions for depreciation or impairment. It is determined in accordance with GPS 340. Recoveries to be included at this item include salvage, subrogation, and input tax credit recoveries, amongst others.

Net OCL - reinsurance recoverables (central estimate)            This is the value of reinsurance recoverables, being amounts due to the reporting Level 2 insurance group under a reinsurance arrangement, that arise from the recognition of the central estimate of OCL. It is determined in accordance with GPS 340 and must be reduced by the amount that is likely to become uncollectable in the future.

                                                                 Level 2 insurance groups should recognise reinsurance recoveries, which are calculated in accordance with GPS 340, but which are due from reinsurance arrangements that do not fully meet the reinsurance documentation tests specified in Prudential Standard GPS 230 Reinsurance Management.

                                                                 Reinsurance recoveries would normally be estimated on the basis of each class of business written by the Level 2 insurance groups. However, there are certain forms of reinsurance where recoveries depend on the combined claims experience of several or all classes of business underwritten by the Level 2 insurance group. In such instances, the estimation will be required to factor in all the individual results by class of business covered by the reinsurance arrangement.

Net OCL - stand-alone risk margin                                This is the value, as at the relevant date, of the stand-alone risk margin component of OCL, net of any reinsurance and non-reinsurance recoveries, determined in accordance with GPS 340. The stand-alone risk margin refers to the risk margin that would be applied to a class of business where no allowance for diversification with other classes of business has been allowed.

Net OCL - total                                                  This is the total of the central estimate and diversified risk margin for OCL, including CHE, net of any reinsurance and non-reinsurance recoveries, determined in accordance with GPS 340.

                                                                 It is calculated as the sum of:

                                                                     * net OCL - central estimate (including claims handling expenses); and
                                                                     * net OCL - diversified risk margin.

O

OCL capital factor %       For Australian business, this is the outstanding claims risk capital factor applicable to each class of business as per GPS 115.

                           For international business, as part of the supplementary information provided to APRA, Level 2 insurance groups are required to have mapped their international business to the Australian classes of business as defined in GPS 001. For international business, Level 2 insurance groups to report a weighted average capital factor which applies to the total of all the classes for each region.

OCL Insurance Risk Charge  The risk charge for outstanding claims risk relates to the risk that the value of net OCL determined in accordance with GPS 340 will