Document ID: chunk:federal_register_of_legislation:F2023L00678:body:0:p6
Version: federal_register_of_legislation:F2023L00678
Segment Type: other
Provision Reference: 
Character Range: 15047–18408

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 addition to the requirements of paragraph 24, a regulated institution that writes lenders mortgage insurance (LMI) business must outline in its ReMS how it manages the exposures and mitigants in place for the risk in relation to future placement of reinsurance arrangements.
    26.         The methodology for adjusting the Probable Maximum Loss[5] (PML) of an LMI in a run-off situation must be documented in the LMI's ReMS.
    27.         If the regulated institution is part of an Australian or global corporate group or operates as a Category C insurer, the ReMS must:

       (a)          include, if applicable, a summary of the group policy objectives and strategies relating to reinsurance;

       (b)          summarise the linkages between the local and group reinsurance arrangements;

       (c)          where any element of a regulated institution's reinsurance management framework is controlled by another entity in the corporate group, or by head office, include details of all such arrangements, including claims settlement procedures where the parent entity or head office purchases reinsurance on a global group basis; and

       (d)          specify any arrangements relating to the existence of, and accessibility to, intra-group reinsurance arrangements.

Reinsurance Arrangements Statement
    28.         Where a regulated institution's reinsurance arrangements incept on a common date, the regulated institution must submit to APRA, on an annual basis, a Reinsurance Statement that details the regulated institution's reinsurance arrangements.[6] The annual submission must occur within two months of the inception of the regulated institution's reinsurance arrangements.

    29.         Where a regulated institution has multiple inception dates for its reinsurance arrangements, the regulated institution must submit to APRA a Reinsurance Statement every six months.

    30.         Where a regulated institution enters into reinsurance arrangements for a period in excess of 12 months, the Reinsurance Statement must confirm the continuation of these arrangements for each year of the duration of the arrangements.

    31.         A Reinsurance Statement must provide substantiation of the implementation of the reinsurance management strategy of the regulated institution detailed in the regulated institution's ReMS. The Reinsurance Statement must contain:

(a)          schematics of the regulated institution's reinsurance arrangements which depict the effect of occurrence and aggregate deductibles and any other arrangement that potentially limits the reinsurers' liability (including number of reinstatements, loss participation clauses and event limit clauses);

(b)          details of each individual reinsurer and, where applicable, the reinsurance group, that participates in each layer of the regulated institution's reinsurance arrangements;

(c)          details of individual parameters by class of business which indicate the highest per risk gross loss and multi-class catastrophic gross event limit