Document ID: chunk:federal_register_of_legislation:F2023L00672:body:0:p11
Version: federal_register_of_legislation:F2023L00672
Segment Type: other
Provision Reference: 
Character Range: 27661–30438

impact of the occurrence of an event. Where an event occurs during the reporting period, the insurer must determine the impact of that event on the level of OA VR. Any changes made to the OA VR as a result of the event are then to be applied until the end of the current reinsurance treaty or the occurrence of another event that impacts OA VR, whichever occurs first.
46.         Subject to paragraphs 9 and 12, OA VR must be calculated and reported to APRA at each reporting date. The calculation of OA VR, at the reporting date, must take into account the reinsurance program in place for the next reporting period. The OA VR calculation at each reporting date must only include potential reinsurance recoverables that were contractually agreed on or before the reporting date.

OA PML
47.         An insurer that has exposures to accumulations of losses arising from a common dependent source or non-natural perils (other accumulations) must determine a PML for its portfolio (OA PML).[16] OA PML is the gross loss arising from the occurrence of a single event, where that loss has 0.5 per cent probability of occurrence over 12 months. An insurer must consider all classes of business and all business underwritten in those classes in determining the largest loss. OA PML must not include any allowance for potential reinsurance recoverables.
48.         An insurer that has exposures to other accumulations may reduce OA PML for any losses within the other accumulations scenario that are already specifically allowed for in the premiums liability[17] of the insurer. This amount must be determined by the Appointed Actuary and included in the AVR. APRA may require the insurer to modify the adjustment to OA PML.

OA reinsurance recoverables
49.         An insurer that has exposures to other accumulations must determine the level of potential reinsurance recoverables[18] should there be the occurrence of OA PML (OA reinsurance recoverables). OA reinsurance recoverables may include any amounts due from aggregate reinsurance cover if the cover has reached its attachment point, or will as a result of the occurrence of OA PML.[19] The reinsurance recoverables 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.
50.         An insurer may discount the retention on any aggregate reinsurance cover for the time value of money if the retention is fixed and not indexed for inflation. The discount period must not be greater than the average period of discount in determining the premiums liability provision. The discount rate must be the relevant risk-free discount rates used by the Appointed Actuary in the AVR.
51.         An insurer must only apply