Document ID: chunk:federal_register_of_legislation:F2023L00723:front:0:p7
Version: federal_register_of_legislation:F2023L00723
Segment Type: other
Provision Reference: 
Character Range: 19818–23632

and comply with HPS 115. Management actions should reflect the insurer's expectations and not be limited to the extent that these result in an insurance profit. This constraint will be applied separately in insurance profits forecast after management actions amount.

                                       For months 1 to 9 inclusive, this is a derived item and is equal to claims incurred (pre-MA) amount.

                                       For general treatment and health-related insurance business, this item is equal to benefits incurred (MA) amount.
Claims incurred (pre-MA) amount        This is a derived item, which provides an approximation of claims incurred, following the Prescribed Benefit Stress to benefits incurred and management expenses in accordance with HPS 115. This derived item provides a basis from which management actions can be taken in determining claims incurred (MA) amount.

                                       For hospital treatment, this item is calculated as:

                                         *

                                       Where:
                                       A equals Claims incurred (AES) amount
                                       B equals Benefits incurred (pre-MA) amount
                                       C equals Benefits incurred (AES) amount
                                       D equals State Levies (pre-MA) amount
                                       E equals State Levies (AES) amount
                                       F equals Gross deficit (AES) amount
                                       G equals Claims incurred (AES) amount

                                       For general treatment and health-related insurance business, this item is equal to benefits incurred (pre-MA) amount.
Class of business                      Relates to insurance business only. This can be:
                                            * hospital treatment;
                                            * general treatment; or
                                            * health-related insurance business (HRIB).

D
Deferred Claims Liability (DCL) aggregation benefit         The DCL aggregation benefit makes an explicit allowance for diversification between the DCL and all other components of insurance risks, as defined in HPS 115 at the 99.5 percent probability of adequacy.
DCL at 75th probability of adequacy (POA) amount            This is the value of claims deferred due to COVID – 19 related disruptions or other circumstances as defined by APRA. This is calculated at the 75 percent probability of adequacy (POA), as at the relevant date, determined in accordance with HPS 340.
DCL at 99.5th probability of adequacy (POA) amount          This is the value of claims deferred due to COVID – 19 related disruptions or other circumstances as defined by APRA. This is calculated at the 99.5 percent probability of adequacy (POA), as at the relevant date, in accordance with HPS 340.
DCL Risk Charge                                             The DCL Risk Charge relates to the risk that the value of the DCL will be greater than the value determined in accordance with HPS 340.

                                                            This is a derived item and is calculated as:
                                                                 * DCL at 99.5th POA amount; less
                                                                 * DCL at 75th POA amount; less
                                                                 * DCL aggregation benefit.
Discount on Future Exposure Risk Charge (FERC) (MA) amount  This is the value of discounting the future cashflows associated with the future exposure risk charge. This is value of cashflows post management actions after the exclusion of