Document ID: chunk:federal_register_of_legislation:F2023L00695:body:0:p6
Version: federal_register_of_legislation:F2023L00695
Segment Type: other
Provision Reference: 
Character Range: 14237–17390

and health-related insurance business being considered;
(b)          the nature, volume and quality of the available data in relation to the experience of the private health insurer and the private health insurance industry;
(c)          the circumstances of the private health insurer; and
(d)          the current and expected environment over the valuation period and the extent to which they are captured in valuation models and data.
29.         Approximate methods may be used when valuing a private health insurer's insurance liabilities subject to the principles of this Prudential Standard, and where the result is not material or not materially different from that which would result from a full valuation process. The onus for justification of the appropriateness of any valuation method rests with:
(a)          the Board of the private health insurer; and
(b)          the Appointed Actuary.

Non-reinsurance recoveries
30.         Non-reinsurance recoveries are amounts that may be recovered under arrangements other than reinsurance arrangements. The treatment of non-reinsurance recoveries must be consistent with that required by reporting standards made under the FSCODA.

Adjustments and exclusions
31.         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.

Attachment A - Reinsurance

Estimation of reinsurance recoverables
     1. The estimation of the value of the insurance liabilities may be undertaken on a gross basis, with a separate estimate of the value of reinsurance recoveries (that is, amounts expected to be recovered under the private health insurer's reinsurance arrangements), or on a net basis. In either case, the principles of this Prudential Standard must be applied. Where the process is undertaken on a net basis, it is still necessary to value separately the estimates of the claims component gross of any reinsurance recoverables and the reinsurance recoverables and expected reinsurance recoveries.[4]

Documentation of reinsurance arrangements
2.             For the purpose of calculating a private health insurer's insurance liabilities, it must be assumed initially that:
(a)          reinsurance arrangements are executed and legally binding contracts;
(b)          reinsurance arrangements are 100 per cent placed, that is, there are no gaps in the insurer's reinsurance arrangements; and
(c)          reinsurance recoverables and expected reinsurance recoveries will be received in full. Where reinsurance arrangements are not executed and legally binding contracts or are not fully placed, or there is a material risk that reinsurance recoverables and expected reinsurance recoveries will not be received from a reinsurer, the private health insurer will either not be able to recognise the reinsurance recoverables and expected reinsurance recoveries or will be required to hold capital against these risks.[5]

Assessment and comment by the Appointed Actuary
3.             The Appointed Actuary[6] must make a specific assessment of and comment on the recoverability of