Document ID: chunk:federal_register_of_legislation:F2023C00194:body:0:p6
Version: federal_register_of_legislation:F2023C00194
Segment Type: other
Provision Reference: 
Character Range: 14309–17273

and rights arising from the deposit component.
(b) Unbundling is permitted, but not required, if the insurer can measure the deposit component separately as in paragraph 2.4.1(a)(i) but its accounting policies require it to recognise all obligations and rights arising from the deposit component, regardless of the basis used to measure those rights and obligations.
(c) Unbundling is prohibited if an insurer cannot measure the deposit component separately as in paragraph 2.4.1(a)(i).
2.4.2 The following is an example of a case when an insurer's accounting policies do not require it to recognise all obligations arising from a deposit component.  A cedant receives compensation for losses from a reinsurer, but the contract obliges the cedant to repay the compensation in future years.  That obligation arises from a deposit component.  If the cedant's accounting policies would otherwise permit it to recognise the compensation as income without recognising the resulting obligation, unbundling is required.
2.4.3 A general insurer, in considering the need to unbundle the deposit component of the general insurance contract, would consider all expected cash flows over the period of the contract and would consider the substance of the contract.  For example, while some financial reinsurance contracts may require annual renewal, in substance they may be expected to be renewed for a number of years.
2.4.4 To unbundle a general insurance contract, an insurer shall:
(a) apply this Standard to the insurance component; and
(b) apply AASB 9 to the deposit component.  When applying AASB 9, an insurer shall designate the deposit component as "at fair value through profit or loss", on first application of this Standard or on initial recognition of the deposit component.

3 Purpose of Standard

3.1 The purpose of this Standard is to:
(a) specify the manner of accounting for general insurance contracts consistent with AASB 4;
(b) specify certain aspects of accounting for assets backing general insurance liabilities;
(c) specify certain aspects of accounting for non-insurance contracts; and
(d) require disclosure of information relating to general insurance contracts.

4 Premium Revenue

Classification
4.1.1 Premium revenue comprises:
(a) premiums from direct business, that is, premiums paid by a policyholder (that is neither an insurer nor reinsurer) to a general insurer; and
(b) premiums from reinsurance business, that is, premiums received by a reinsurer from an insurer or from another reinsurer.
4.1.2 Premiums from direct business arise from contracts when a policyholder transfers significant insurance risk to an insurer.
4.1.3 Premiums from reinsurance business arise from contracts when an insurer or reinsurer transfers significant insurance risk to another reinsurer.

Recognition
4.2 Premium revenue shall be recognised from the attachment date as soon as there is a basis on which it can be reliably estimated.
4.2.1 The amount of