Document ID: chunk:federal_register_of_legislation:F2023L00602:front:0:p7
Version: federal_register_of_legislation:F2023L00602
Segment Type: other
Provision Reference: 
Character Range: 17218–20634

at the relevant date, of the central estimate component of OCL, including claims handling expenses, net of any reinsurance and non-reinsurance recoveries, determined in accordance with GPS 340.

                                                                 It is calculated as the sum of:

                                                                     * net OCL - central estimate (excluding claims handling expenses); and
                                                                     * claims handling expenses.

Net OCL - diversified risk margin                                This is the value, as at the relevant date, of the diversified risk margin component of OCL, net of any reinsurance and non-reinsurance recoveries, determined in accordance with GPS 340. The diversified risk margin refers to the risk margin that has been applied to the class of business after allowance for diversification across the whole insurance portfolio.

Net OCL - non-reinsurance recoveries (central estimate)          This is the value of recoveries under arrangements, other than reinsurance arrangements, receivable by the reporting insurer associated with the central estimate of OCL, net of any provisions for depreciation or impairment. It is determined in accordance with GPS 340. Recoveries to be included at this item include salvage, subrogation, and input tax credit recoveries, amongst others.

Net OCL - reinsurance recoverables (central estimate)            This is the value of reinsurance recoverables, being amounts due to the reporting insurer under a reinsurance arrangement, that arise from the recognition of the central estimate of OCL. It is determined in accordance with GPS 340 and must be reduced by the amount that is likely to become uncollectable in the future.

Net OCL - stand-alone risk margin                                This is the value, as at the relevant date, of the stand-alone risk margin component of OCL, net of any reinsurance and non-reinsurance recoveries, determined in accordance with GPS 340. The stand-alone risk margin refers to the risk margin that would be applied to a class of business where no allowance for diversification with other classes of business has been allowed.

Net OCL - total                                                  This is the total of the central estimate and diversified risk margin for OCL, including CHE, net of any reinsurance and non-reinsurance recoveries, determined in accordance with GPS 340.

                                                                 It is calculated as the sum of:

                                                                      * net OCL - central estimate (including claims handling expenses); and
                                                                      * net OCL - diversified risk margin.

O

OCL capital factor %       This is the outstanding claims risk capital factor applicable to each class of business as per GPS 115.

OCL Insurance Risk Charge  The risk charge for outstanding claims risk relates to the risk that the value of net OCL determined in accordance with GPS 340 will be insufficient to cover associated net claim payments and any associated claim expenses as they fall due.

                           This is to be determined in accordance with GPS 115.

                           The OCL Insurance Risk Charge is calculated for each combination