Document ID: chunk:federal_register_of_legislation:F2023L00015:reg:21:p79
Version: federal_register_of_legislation:F2023L00015
Segment Type: reg
Provision Reference: reg 21 (pt 79/101)
Character Range: 249182–252410

Standard and the beginning of the comparative period to which AASB 17/ PBE IFRS 17 would apply mandatorily, the transition effort will be much greater for some public sector entities than for others; and

          (b) although a number of the public sector modifications made to AASB 17/PBE IFRS 17 are expected to help facilitate the transition process, some public sector entities may need the additional time to inform key users of the changes to their financial statements.

     The Boards also noted that harmonisation across the two jurisdictions is desirable both in terms of the requirements and the practical effective date.

Captive insurers (Amendments to AASB 1050 Administered Items)

     BC260        The Boards noted that large consolidated group entities sometimes establish a 'captive insurer' subsidiary to coordinate risk management for all (or most) entities within the group.[26] The subsidiary typically charges premiums to other entities in the group and pays them valid claims in respect of insured events, and ordinarily (re)insures some or all of the risks with one or more third-party (re)insurer(s). Australian or New Zealand-based private sector captive insurers would need to be registered as insurers and, therefore, required to prepare general purpose financial statements and meet relevant regulatory and prudential requirements.

     BC261        The Boards noted that governments also create captive insurers and the key motivations are typically to:

          (a) centralise the administration of insurable risks across a complex group of entities and coordinate risk management policies and processes;

          (b) charge premiums to other government agencies and, thereby, create incentives for them to manage risks; and

          (c) in some cases, coordinate in a cost-beneficial manner the acquisition of insurance/reinsurance coverage from an external insurer/reinsurer.

     BC262        The Boards observed that, at the whole-of-government level:

          (a) transactions between the captive insurer and other government agencies are eliminated;

          (b) any (re)insurance contracts between the captive and third-party insurers are treated as insurance contracts in which the government is a policyholder; and

          (c) any remaining liabilities to third parties (for example, to government employees for workplace injuries) would be accounted for by applying AASB 137/PBE IPSAS 19.

     BC263        The Boards considered whether they should:

          (a) in the context of the requirements imposed on private sector Australian-based and New Zealand-based captive insurers, explicitly require public sector captive insurers that prepare general purpose financial statements to apply AASB 17/PBE IFRS 17; or

          (b) given the eliminations at the whole-of-government level, explicitly scope public sector captive insurers out of applying AASB 17/PBE IFRS 17.

     BC264        The Boards noted the following in respect of the AASB Discussion Paper (2017).

          (a) It was proposed that public sector captive insurers should be permitted an optional exemption to not apply AASB 17 on the basis that:

               (i) some captive public sector