Document ID: chunk:federal_register_of_legislation:F2023C00194:body:0:p35
Version: federal_register_of_legislation:F2023C00194
Segment Type: other
Provision Reference: 
Character Range: 92130–94962

components of a contract as if they were separate contracts
weather derivative means a contract that requires payment based on climatic, geological or other physical variables
19.2 The following terms are defined in AASB 9 or AASB 132 and are used in this Standard with the meaning specified in those Standards:
          (a) financial asset;
          (b) financial guarantee contract;
          (c) financial instrument; and
          (d) financial liability.

Appendix A
Definition of an Insurance Contract

This Appendix is an integral part of AASB 1023.

1 This Appendix gives guidance on the definition of an insurance contract in section 19 of the Standard.  It addresses the following issues:
(a) the term 'uncertain future event' (paragraphs 2-4);
(b) payments in kind (paragraphs 5-6);
(c) insurance risk and other risks (paragraphs 7-16);
(d) examples of insurance contracts (paragraphs 17-20);
(e) significant insurance risk (paragraphs 21-26); and
(f) changes in the level of insurance risk (paragraphs 27 and 28).

Uncertain Future Event
2 Uncertainty (or risk) is the essence of an insurance contract.  Accordingly, at least one of the following is uncertain at the inception of an insurance contract:
(a) whether an insured event will occur;
(b) when it will occur; or
(c) how much the insurer will need to pay if it occurs.
3 In some insurance contracts, the insured event is the discovery of a loss during the term of the contract, even if the loss arises from an event that occurred before the inception of the contract.  In other insurance contracts, the insured event is an event that occurs during the term of the contract, even if the resulting loss is discovered after the end of the contract term.
4 Some insurance contracts cover events that have already occurred, but whose financial effect is still uncertain.  An example is a reinsurance contract that covers the direct insurer against adverse development of claims already reported by policyholders.  In such contracts, the insured event is the discovery of the ultimate cost of those claims.

Payments in Kind
5 Some insurance contracts require or permit payments to be made in kind.  An example is when the insurer replaces a stolen article directly, instead of reimbursing the policyholder.  Another example is when an insurer uses its own hospitals and medical staff to provide medical services covered by the contracts.
6 Some fixed-fee service contracts in which the level of service depends on an uncertain event meet the definition of an insurance contract in this Standard but are not regulated as insurance contracts in some countries.  One example is a maintenance contract in which the service provider agrees to repair specified equipment after a malfunction.  The fixed service fee is based on the expected number of malfunctions, but it