Document ID: chunk:federal_register_of_legislation:F2023L00694:body:0:p1
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Life Insurance (prudential standard) determination

No. 12 of 2023

Prudential Standard LPS 340 Valuation of Policy Liabilities

Life Insurance Act 1995

I, Helen Rowell, a delegate of APRA:

    (a)          under subsection 230A(5) of the Life Insurance Act 1995 (the Act) revoke Life Insurance (prudential standard) determination No. 12 of 2012, including Prudential Standard LPS 340 Valuation of Policy Liabilities made under that Determination; and

    (b)          under subsection 230A(1) of the Act determine Prudential Standard LPS 340 Valuation of Policy Liabilities, which applies to all life companies, including friendly societies.

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.

friendly society has the meaning given in section 16C of the Act.

life company has the meaning given in the Schedule to the Act.

Schedule

Prudential Standard LPS 340 Valuation of Policy Liabilities, comprises the document commencing on the following page.

Prudential Standard LPS 340

Valuation of Policy Liabilities
Objectives and key requirements of this Prudential Standard
A life company must make a valuation of policy liabilities under section 114 of the Life Insurance Act 1995. The valuation must be made in accordance with the principles and requirements set out in this Prudential Standard. The ultimate responsibility for the value of a life company's policy liabilities rests with the Board of a life company.
The key requirements of this Prudential Standard are that a life company must:
     * classify life insurance business as friendly society business, life insurer non-participating business or life insurer participating business;
     * make a separate valuation of policy liabilities for each approved benefit fund or statutory fund;
     * for each friendly society approved benefit fund, make a separate valuation of policy liabilities for each class of life insurance business to which the fund relates;
     * for each Australian or Australian/overseas fund of a life company other than a friendly society, make a separate valuation of policy liabilities for each class of life insurance business to which the fund relates, each category of business within such a class and each subcategory of business within such a category;
     * for each overseas fund of a life company other than a friendly society, make a separate valuation of policy liabilities for each class of life insurance business to which the fund relates and each category of business within such a class;
     * in respect of friendly society business and life insurer non-participating business, generally value policy liabilities in accordance with Australian Accounting Standards;
     * in respect of life insurer participating business, value policy liabilities in accordance with the requirements set out in this Prudential Standard; and
     * for all life insurance business, use