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Insurance (prudential standard) determination

No. 10 of 2023

Prudential Standard GPS 340 Insurance Liability Valuation

Insurance Act 1973

I, Helen Rowell, a delegate of APRA:

    (a)          under subsection 32(4) of the Insurance Act 1973 (the Act), revoke Insurance (prudential standard) determination No. 3 of 2018, including Prudential Standard GPS 340 Insurance Liability Valuation, made under that Determination; and

    (b)          under subsection 32(1) of the Act determine Prudential Standard GPS 340 Insurance Liability Valuation, in the form set out in the Schedule, which applies to:

        (i)                  all general insurers and authorised NOHCs; and

        (ii)                a subsidiary of a general insurer or authorised NOHC, where that subsidiary is a parent entity of a Level 2 insurance group.

This instrument commences on 1 July 2023.
Dated: 24 May 2023

[Signed]

Helen Rowell
Deputy Chair

Interpretation

In this instrument:

APRA means the Australian Prudential Regulation Authority.

authorised NOHC has the meaning given in section 3 of the Act.

general insurer has the meaning given in section 11 of the Act.

Level 2 insurance group has the meaning given in Prudential Standard GPS 001 Definitions.

parent entity has the meaning given in Prudential Standard GPS 001 Definitions.

subsidiary has the meaning given in Prudential Standard GPS 001 Definitions.

Schedule

Prudential Standard GPS 340 Insurance Liability Valuation, comprises the document commencing on the following page.

Prudential Standard GPS 340

Insurance Liability Valuation
Objectives and key requirements of this Prudential Standard
This Prudential Standard sets out requirements for the valuation of insurance liabilities of a general insurer or Level 2 insurance group.
The ultimate responsibility for the valuation of insurance liabilities rests with the Board of the general insurer or Level 2 insurance group.
A general insurer or Level 2 insurance group must value its insurance liabilities in accordance with the principles and methodology set out in this Prudential Standard.
For the purposes of the capital standards and reporting requirements under the Financial Sector (Collection of Data) Act 2001 (Collection of Data Act), a general insurer's or Level 2 insurance group's insurance liabilities must be valued in accordance with this Prudential Standard.

Table of Contents
Authority
Application and commencement
Interpretation
Valuation of insurance liabilities
Discount Rates
Estimation of reinsurance recoverables
Non-reinsurance recoveries
Adjustments and exclusions
Previous exercise of discretion
Attachment A – Level 2 insurance groups

Authority
     1. This Prudential Standard is made under section 32 of the Insurance Act 1973 (the Act).

Application and commencement
2.             This Prudential Standard applies to each:
(a)          general insurer authorised under the Act (insurer); and
(b)          Level 2 insurance group as defined in Prudential Standard GPS 001 Definitions (GPS 001).
3.             Where a requirement applies to a Level 2 insurance group, the requirement is imposed on the parent entity of