Document ID: chunk:federal_register_of_legislation:F2023L00634:body:0:p10
Version: federal_register_of_legislation:F2023L00634
Segment Type: other
Provision Reference: 
Character Range: 26546–29778

OA PML is the gross loss arising from the occurrence of a single event, such that the size of the loss has 0.5 per cent probability of occurrence. An insurer with exposures to accumulations of losses arising from a common dependent source or non-natural perils must determine OA PML.

OA reinstatement cost                             OA reinstatement cost is the cost (if any) of reinstating all catastrophe reinsurance cover relating to OA reinsurance recoverables. In determining this cost, if the insurer does not have contractually agreed rates for the reinsurance cover, the insurer must estimate the cost based on the current reinsurance market conditions. The amount must not be less than the full original cost of the cover with no deduction for the expiry of time since the inception of the reinsurance arrangements unless the insurer is able to demonstrate to APRA that the amount materially overstates the cost that would prevail.

OA reinsurance recoverables                       OA reinsurance recoverables is the level of potential reinsurance recoverables should there be occurrence of OA PML. This amount may include any amounts from aggregate reinsurance cover if the cover has reached its attachment point, or will as a result of OA PML.

                                                  The reinsurance recoverables can then be applied until the cover has been exhausted by claims by the insurer or the date that the aggregate reinsurance treaty expires, whichever occurs first.

Other accumulations vertical requirement (OA VR)  The other accumulations vertical requirement (OA VR) is calculated as the sum of:

                                                      * OA PML; and
                                                      * OA reinstatement cost

                                                  less:

                                                      * PL adjustment to OA PML; and
                                                      * OA reinsurance recoverables.

Other adjustments                                 Other adjustments include potential reinsurance recoverables from aggregate reinsurance cover. Aggregate reinsurance cover is eligible to be considered for inclusion in the NP VR once the aggregate reinsurance cover has reached its attachment point, or will as a result of the occurrence of NP PML, or net whole-of-portfolio loss, as appropriate. The reinsurance recoverables from aggregate reinsurance cover must then be applied up until the cover has been exhausted by claims by the insurer or the date that the aggregate reinsurance treaty expires, whichever occurs first.

P

PL adjustment to OA PML  The insurer may reduce the OA PML for any losses included in the other accumulation scenario that is already specifically allowed for in the premiums liabilities of the insurer.

PL offset                PL offset is the portion of the premiums liability provision which relates to catastrophic losses (those that give rise to a relatively significant number of claims and occur no more frequently than every three months), as determined by the Appointed Actuary.

S

Single event loss from H3 event  The single event loss from H3 event is the gross or net loss