Document ID: chunk:federal_register_of_legislation:F2023L00694:body:0:p17
Version: federal_register_of_legislation:F2023L00694
Segment Type: other
Provision Reference: 
Character Range: 44023–47124

of the actual expenses and the expected expenses of the company.
98.         Expenses are to be allocated to the following expense categories:
(a)          acquisition expenses;
(b)          maintenance expenses;
(c)          investment expenses; and
(d)          one-off expenses.
99.         When determining BEL, each expense category must include all relevant expenses whether direct or indirect and in aggregate the expense categories must include the total expenses of the company other than one-off expenses determined in accordance with paragraphs 110 and  111. Total expenses for this purpose are total operating expenses.
100.     When determining BEL, each APRA product group must include all relevant expenses whether direct or indirect and in aggregate the APRA product groups must include the total expenses of the company.
101.     To the extent that an expense can be readily allocated to a particular expense category, a subcategory or an APRA product group, it must be so allocated.
102.     It is recognised that there are circumstances where arrangements (internal or external) provide for the limitation of the expenses borne by a particular APRA product group or a subcategory. Such arrangements, to the extent substantiated as bona fide by the life company, may be reflected in the final allocation of expenses provided transparency of the allocation process is retained.
103.     An expense which cannot be readily allocated to a particular expense category, APRA product group or a subcategory must be appropriately allocated reflecting the following:
(a)          the functional activities to which the expense relates; and
(b)          an appropriate relationship between those functional activities and both the expense categories, the APRA product groups and the subcategories.
104.     In undertaking the allocation described in paragraph 105 regard must be had for a diligent assessment of:
(a)          the purpose of the company in incurring a particular expense; and
(b)          the contribution of that expense to the business of the company
    while retaining the integrity of the principles and requirements outlined in Part E.
Apportionment process
105.     Processes of apportionment will be required, to a greater or lesser extent, in undertaking the allocation of expenses. These processes must be based on recent analyses of the operations of the life business and the identification of appropriate expense drivers and related expense apportionment ratios.
Service agreements
106.     Where activities of the company are being provided externally, through a service agreement or other contractual arrangement, the allocation of the company's expenses relating to those activities must be reasonably consistent with the principles and requirements of this section. Where the service company fees are unreasonable as a basis for the allocation, the life company must determine an alternative allocation applying the principles and requirements of this section on a 'look-through' basis.
107.     The information required to undertake this allocation should be