Document ID: chunk:federal_register_of_legislation:F2023L00678:body:0:p5
Version: federal_register_of_legislation:F2023L00678
Segment Type: other
Provision Reference: 
Character Range: 11643–15343

reinsurance management and control, reflecting the regulated institution's appetite for risk[2];
       (b)          identify the key elements of the regulated institution's policies and procedures, processes and controls that comprise the regulated institution's reinsurance management framework;
       (c)          document the process and methodologies for setting and monitoring its ICRC[3] covering at least:
           (i)            the regulated institution's willingness to take on risks associated with insurance concentration in their activities;

           (ii)         how the regulated institution's financial resources cover its ICRC;

           (iii)       justification for any adjustments or assumptions made by the regulated institution when setting and monitoring its ICRC, such as all allowances made for aggregate reinsurance cover and adjustments to the other accumulations vertical requirement;

           (iv)       the review of policies and procedures in light of the regulated institution's business activities, as well as current market conditions (for example, the availability of adequate catastrophe reinsurance cover and aggregate reinsurance cover) and the frequency of that review;

           (v)          the review of reinsurance management policies approved by the Board and the frequency of that review; and

           (vi)       the independent review of compliance with reinsurance management policies and procedures, and the frequency of that review;

       (d)          provide a summary of the processes for selecting, implementing, monitoring and reviewing reinsurance arrangements[4], including:
           (i)            identification and management of aggregations of risk;

           (ii)         methodologies for identification and management of upper bounds of arrangements;

           (iii)       methodologies for the selection of reinsurance participants, including the consideration of diversification and the reinsurers' creditworthiness;

           (iv)       comment on the expected cession ratios for reinsurance arrangements;

           (v)          a description of the processing of reinsurance premiums and the collection of reinsurance assets arising under these arrangements, including how the recoverability of reinsurance assets is assessed; and

           (vi)       systems and control mechanisms for monitoring reinsurance placements and reinsurance assets, including independent review responsibilities and procedures;

       (e)          provide a summary of the process for ensuring accurate and complete reinsurance documentation is put in place;
       (f)           describe the processes for setting and monitoring retentions so that the regulated institution's ICRC is not exceeded;
       (g)          describe the processes for reviewing and ensuring the adequacy of reinstatements of all or parts of the regulated institution's catastrophe reinsurance arrangements (including the financial and operational implications of not having a sufficient number of contractually agreed reinstatements during the period of cover);
       (h)          identify those persons or groups of persons with managerial responsibility for the reinsurance management framework (including those persons responsible for reinsurance purchasing, collecting reinsurance assets and audit of the systems) and set out their roles and responsibilities in relation to that framework; and
       (i)            cover both the Australian operations and the risks arising from the overseas operations of the regulated institution that could impact on the Australian operations of the regulated institution.
    25.         In