Document ID: chunk:federal_register_of_legislation:F2023L00734:body:0:p6
Version: federal_register_of_legislation:F2023L00734
Segment Type: other
Provision Reference: 
Character Range: 13682–15696

as at the calculation date, for the relevant duration.

Deferred Claims Liability Risk Charge
36.         The Deferred Claims Liability Risk Charge relates to the risk that the value of the deferred claims liability will be greater than the value determined in accordance with HPS 340.
37.         The Deferred Claims Liability Risk Charge is calculated as:
Deferred claims liability at 99.5 per cent; less
Deferred claims liability; less
DCL aggregation benefit.
Where:
(a)          Deferred claims liability at 99.5 per cent is the deferred claims liability valued at a 99.5 per cent level of sufficiency. This means that, in the assessment of the private health insurer, there is no more than a 0.5 per cent probability that the actual cost will exceed this estimate.
(b)          Deferred claims liability is the value of deferred claims liability determined in accordance with HPS 340.
(c)          DCL aggregation benefit is:
Where:
            (i)                 'D' is the difference between the Deferred claims liability at 99.5 per cent and the Deferred claims liability. It is calculated as:

            Deferred claims liability at a 99.5 per cent as defined in paragraph 37(a); less

            Deferred claims liability determined in accordance with HPS 340 as defined in paragraph 37(b).
            (ii)               'O' is the sum of all other components within the Insurance Risk Charge (i.e. the Insurance Liability Risk Charge and FER).
            (iii)            'correlation' is 20 per cent.

Tax benefits
38.         Each component of the Insurance Risk Charge must not incorporate any tax benefits. Tax benefits may reduce the prescribed capital amount as prescribed in Prudential Standard HPS 110 Capital Adequacy (HPS 110).

Adjustments and exclusions
39.         APRA may, by notice in writing to a private health insurer, adjust or exclude a specific requirement in this Prudential Standard in relation to that private health insurer.

[1] as determined in accordance with HPS 340