Document ID: chunk:federal_register_of_legislation:F2023C00194:body:0:p39
Version: federal_register_of_legislation:F2023C00194
Segment Type: other
Provision Reference: 
Character Range: 102376–105238

9 and AASB 7 or this Standard to such financial guarantee contracts;
(f) product warranties.  Product warranties issued by another party for goods sold by a manufacturer, dealer or retailer are within the scope of this Standard.  However, product warranties issued directly by a manufacturer, dealer or retailer are outside its scope, because they are within the scope of AASB 15 Revenue from Contracts with Customers and AASB 137 Provisions, Contingent Liabilities and Contingent Assets;
(g) title insurance (i.e. insurance against the discovery of defects in title to land that were not apparent when the insurance contract was written).  In this case, the insured event is the discovery of a defect in the title, not the defect itself;
(h) travel assistance (i.e. compensation in cash or in kind to policyholders for losses suffered while they are travelling).  Paragraphs 5 and 6 of this Appendix discuss some contracts of this kind;
(i) catastrophe bonds that provide for reduced payments of principal, interest or both if a specified event adversely affects the issuer of the bond (unless the specified event does not create significant insurance risk, for example if the event is a change in an interest rate or foreign exchange rate);
(j) insurance swaps and other contracts that require a payment based on changes in climatic, geological or other physical variables that are specific to a party to the contract; and
(k) reinsurance contracts.
18 The following are examples of items that are not general insurance contracts:
(a) contracts that have the legal form of insurance, but pass all significant insurance risk back to the policyholder through non-cancellable and enforceable mechanisms that adjust future payments by the policyholder as a direct result of insured losses, for example some financial reinsurance contracts or some group contracts (such contracts are normally non-insurance financial instruments or service contracts, see paragraphs 19 and 20 of this Appendix);
(b) self-insurance, in other words retaining a risk that could have been covered by insurance (there is no insurance contract because there is no agreement with another party);
(c) contracts (such as gambling contracts) that require a payment if a specified uncertain future event occurs, but do not require, as a contractual precondition for payment, that the event adversely affects the policyholder.  However, this does not preclude the specification of a predetermined payout to quantify the loss caused by a specified event such as an accident;
(d) derivatives that expose one party to financial risk but not insurance risk, because they require that party to make payment based solely on changes in one or more of a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index