Document ID: chunk:federal_register_of_legislation:F2023L00734:body:0:p3
Version: federal_register_of_legislation:F2023L00734
Segment Type: other
Provision Reference: 
Character Range: 5710–8569

HRIB Stress % is as defined in paragraph 14 (d).
(c)
    Where:
(i)
(ii)
Where:
growtht = HT SEU increase over last 12 months divided by HT SEUs at the reporting date.
growtht-1 = HT SEU increase over prior 12 months (12-24 months) divided by HT SEUs at the reporting date.
growtht-2 = HT SEU increase over prior 12 months (24-36 months) divided by HT SEUs at the reporting date.
Where a merger has occurred since t-2, growth is to be calculated on the total HT SEU's for the merged private health insurers, such that only organic growth is captured.
(d)

Risk Equalisation Risk Charge
15.         The Risk Equalisation Risk Charge relates to the risk that the value of risk equalisation transfers are less favourable than the value determined in accordance with HPS 340.
16.         The risk equalisation risk charge is calculated as:
Where:
    Unbilled calculated deficit means total amount that would have been payable by the insurer should each SEU been entitled to the average amount as defined in rule 11(1)(e) of the Private Health Insurance (Risk Equalisation Policy) Rules 2015 or its replacement, and under the following conditions:
(a)          over the period up to the reporting date;
(b)          where the risk equalisation levy has accrued but has not yet been paid; and
(c)          where an invoice, notice or receipt from APRA has not yet been received by the private health insurer, for that period.

Other Insurance Liabilities Risk Charge
17.         The Other Insurance Liabilities Risk Charge relates to the risk that the value of other insurance liabilities will be greater than the value determined in accordance with HPS 340.
18.         The Other Insurance Liabilities Risk Charge is calculated as:
    Other insurance liabilities at 99.5 per cent; less
    Other insurance liabilities.
    Where:
(a)          Other insurance liabilities at 99.5 per cent is other insurance liabilities as defined by HPS 340 valued at a 99.5 per cent level of sufficiency. This means that, in the assessment of the private health insurer, there is no more than a 0.5 per cent probability that the actual cost will exceed this estimate.
(b)          Other insurance liabilities is the value of other insurance liabilities determined in accordance with HPS 340.

Future Exposure Risk Charge
19.         The Future Exposure Risk Charge (FER) relates to the risk that financial performance of the HIB and HRIB may be materially worse than expected and may require capital to meet policyholder obligations. The FER is calculated as:
    Where:
(a)          FERHIB is the charge for the health insurance business, related to the Adverse Event Stress combined with the Prescribed Benefit Stress.
(b)          FERHRIB is the charge for health-related insurance business, related to the Prescribed Benefit Stress only.
(c)          Both components have