Document ID: chunk:federal_register_of_legislation:F2023L00015:reg:21:p3
Version: federal_register_of_legislation:F2023L00015
Segment Type: reg
Provision Reference: reg 21 (pt 3/101)
Character Range: 38373–41461

it is indicative of an enforceable contract; and

          (b) when an individual or entity can identify promised amounts or amounts based on agreed parameters that they will receive from the public sector entity on the occurrence of specified events, it is indicative of an enforceable contract.

     E11                When a public sector entity or its controlling government has the practical ability under existing or substantively enacted legislation to retrospectively deny or substantively change promised benefits or compensation, the policyholder does not have enforceable rights under the arrangement and the public sector entity does not have enforceable obligations for promised amounts or for amounts based on agreed parameters. For example, if an entity can retrospectively make a substantive change to the amount of benefits, such as by curtailing compensation being paid to a beneficiary in relation to a past event under existing legislation, this indicates the arrangement is not enforceable.

     E12                An arrangement that involves a public sector entity issuing documentation to another party, similar to an insurance contract issued by a private sector insurer, would be indicative of an agreement that creates enforceable rights and obligations. However, having some or all of the substantive rights and obligations for an insurance arrangement being set out in law or regulation would not necessarily mean that the arrangement is unsuitable to be accounted for as an insurance contract. In common with the private sector, arrangements need to be interpreted within a regulatory framework and, consistent with paragraphs 2 and Aus2.1, an entity is required to consider its substantive rights and obligations, whether they arise from a contract, law or regulation.

Pre-requisite: Identifiable coverage period

     E13                An insurance contract has an identifiable coverage period – either the period during which insured events occur (losses-occurring coverage) or the period during which claims become known (claims-made coverage).

     E14                In determining whether there is an identifiable coverage period for a public sector arrangement, the following factors may be relevant:

          (a) there is documentation agreed between the public sector entity and a participant in an arrangement that identifies a period over which coverage is to be provided;

          (b) funding, for example from participant premiums or levies, is associated with coverage for an identifiable period that may, for example, be set out in law or regulation; and

          (c) a public sector arrangement is an adjunct, for example based on law or regulation, to an insurance contract issued by another entity (eg a private sector insurer) and a coverage period for the public sector arrangement can be determined by reference to the insurance contract of the other entity.

     E15                In relation to paragraph E14(b), in some circumstances a public sector entity may be able to determine coverage periods for its arrangements