Document ID: chunk:federal_register_of_legislation:F2023L00015:reg:21:p29
Version: federal_register_of_legislation:F2023L00015
Segment Type: reg
Provision Reference: reg 21 (pt 29/101)
Character Range: 110790–113749

ability would be included in AASB 17/PBE IFRS 17. They also concluded that additional guidance should be provided along the following lines.

          (a) Public sector entities would need to consider whether multi-year pricing reviews removed the practical ability to reprice more frequently or whether, in substance, it remains feasible for an entity to re-price for risk on a more frequent basis.

          (b) In some cases, the period over which claims for benefits might arise under a public sector arrangement would be determinable from the period over which coverage is provided under an insurance contract issued by a private sector insurer. This may be the case when, for example, the public sector entity's arrangements are funded from a levy on the insurance contracts issued by a private sector insurer and the levy is intended to meet claims for benefits arising from events that occur during the private sector insurance contract coverage periods.

          (c) In other cases, the period over which claims for benefits might arise under a public sector arrangement may not be determinable from the period over which coverage is provided under an insurance contract issued by a private sector insurer. This may be the case when, for example, the public sector entity's arrangements are funded from a levy on the insurance contracts issued by a private sector insurer in a particular period (say, 1 July to 30 June) and the levy is intended to meet claims for benefits arising from events in that period, rather than from events during the private sector insurance contract coverage periods (which may be for years commencing on any day of the year).

     BC75            The Boards concluded that this additional guidance is particularly important in providing many public sector entities with a basis for determining when they have an identifiable coverage period, being one of the pre-requisites for applying AASB 17/PBE IFRS 17.

Contract boundaries and coverage periods – impact of monopoly and standing ready over the long-run

     BC76            The Boards observed that:

          (a) the IASB presumably developed IFRS 17 largely with competitive markets in mind [IFRS 17.BC167 & BC168(a)]; and

          (b) most of the public sector entities that are the subject of the joint AASB/NZASB project are monopolies or near monopolies,[14] and are not able to withdraw from the market(s) they serve without a change of legislation.

     BC77            The Boards also observed that, for a public sector entity, a monopoly position can mean:

          (a) the power to charge above-market levies/premiums; but

          (b) the responsibility to keep providing insurance services to a community of policyholders in perpetuity, or at least until there is legislative change and/or structural changes to the markets served.

     BC78            The Boards considered whether the responsibility to keep providing insurance services