Document ID: chunk:federal_register_of_legislation:F2023L00694:body:0:p2
Version: federal_register_of_legislation:F2023L00694
Segment Type: other
Provision Reference: 
Character Range: 2748–6077

generally value policy liabilities in accordance with Australian Accounting Standards;
     * in respect of life insurer participating business, value policy liabilities in accordance with the requirements set out in this Prudential Standard; and
     * for all life insurance business, use the method specified in this Prudential Standard to calculate the best estimate liability.

Table of Contents
Authority
Application and commencement
Interpretation
Part A – Policy classification and application
Policy classification and application
Part B – Valuation of policy liabilities for friendly society business, life insurer non-participating business and life insurer participating business
Friendly society business
Life insurer non-participating business
Life insurer participating business
Part C – VSA led method for valuing policy liabilities for life insurer participating business
The valuation of policy liabilities
The best estimate liability
New business – calculation of expected future profits
Reporting date recalculations
Loss recognition
Reinsurance
Part D – Best estimate liability (BEL)
Valuing liability options
Investment earnings
The discount rate
Taxation
Servicing expenses
Other assumptions
Part E – General requirements for all forms of policy and the Appointed Actuaries statement
Allocation of expenses
Materiality
Approximate methods
Adjustments and exclusions
Previous exercise of discretion

Authority
     1. This Prudential Standard is made under paragraph 230A(1)(a) of the Life Insurance Act 1995 (the Act).

Application and commencement
2.             This Prudential Standard applies to all life companies including friendly societies (together referred to as life companies) registered under the Act[1], except where expressly noted otherwise.
3.             This Prudential Standard only applies to the business of an Eligible Foreign Life Insurance Company which is carried on through its Australian statutory funds but not otherwise.[2]
4.             This Prudential Standard applies to life companies from 1 July 2023.

Interpretation
5.             Terms that are defined in Prudential Standard LPS 001 Definitions (LPS 001) appear in bold the first time they are used in this Prudential Standard.
6.             This Prudential Standard is written in the context of Australian legislation and bases of taxation. Appropriate adjustment should be made, for example to allow for different bases of taxation, where this Prudential Standard is being applied to overseas business.
7.             Unless otherwise stated:
(a)          the terms 'Australian fund', 'Australian/overseas fund', 'Australian policy owners' retained profits', 'class of life insurance business', 'investment account contract', 'investment-linked contract', 'life business', 'life insurance business', 'life policy', 'non-participating business', 'overseas fund', 'overseas policy owners' retained profits', 'participating business', 'policy', 'policy liability' and 'section 12A or 12B policy' have the meaning given in the Dictionary to the Act;
(b)          the term 'life insurers' will be used to refer to life companies other than friendly societies;
(c)          for life insurers, the term 'category of business' has the meaning given by section 75 or section 76 of the Act, as applicable;
(d)          for