Document ID: chunk:federal_register_of_legislation:F2023L00697:front:0:p11
Version: federal_register_of_legislation:F2023L00697
Segment Type: other
Provision Reference: 
Character Range: 31560–35047

arrangements to protect the business; and commission that would be payable to secure the business once it is written (such as brokerage or reinsurance exchange commission).

                                                                                     Typically this will be for policies for which a written premium is not yet recognised under accounting standards, and have not been included in the PL, but for which the Level 2 insurance group has already committed to cover.

                                                                                     The materiality of the business that incepts in the next reporting period should be determined in accordance with the Australian Accounting and Auditing Standards subject to APRA's discretion.

P

PL capital factor %             This is the premiums liability risk capital factor applicable to each class of business as per GPS 115.

                                For international business, as part of the supplementary information provided to APRA, Level 2 insurance groups are required to have mapped their international business to the Australian classes of business as defined in GPS 001. For international business, Level 2 insurance groups to report a weighted average capital factor which applies to the total of all the classes for each region.

PL Insurance Risk Charge        This is the component of the Insurance Risk Charge which relates to the risk that the value of the net PL is greater than the value determined in accordance with GPS 340.

                                For a Level 2 insurance group, under the GPS 340 basis, it is calculated as:

                                    * net PL – total;

                                multiplied by:

                                    * PL capital factor %.

                                For a Level 2 insurance group, under the AASB basis, it is calculated as:

                                    * adjusted net premiums liabilities;

                                multiplied by:

                                    * PL capital factor %.

                                Apply a zero risk charge where net PL – total or adjusted net premiums liabilities are negative.

Policy administration expenses  This item is the present value of policy administration expense associated with the GPS 340 PL.

                                Level 2 insurance groups may use approximate methods and may take into account materiality (i.e. whether it would result in a materially different outcome) to report this item if this item is not readily available.

R

Reinsurance business                                                   This refers to the reinsurance business written by the reporting Level 2 insurance group in accordance with the reinsurance classes of business listed in GPS 001 and GPS 115. For reinsurance business, the classes of business are to be aggregated by the category and reinsurance type as per Table 2 of Attachment A in GPS 115.

Reinsurance commissions                                                This item is the present value of reinsurance commissions relating to reinsurance held, associated with the GPS 340 PL. Examples include but are not limited to reinsurance exchange commissions and profit commissions.

                                                                       This excludes any acquisition commission expenses that are not reported as part of the GPS 340 PL. This also excludes