Document ID: chunk:federal_register_of_legislation:F2023C00194:body:0:p31
Version: federal_register_of_legislation:F2023C00194
Segment Type: other
Provision Reference: 
Character Range: 81241–84370

number of years.  If this format is adopted, disclosure by accident year, gross and net of reinsurance, of undiscounted claims would normally be most relevant to the users of financial statements.  The insurer explains the information presented.  This includes whether the claims are discounted or undiscounted, gross or net of reinsurance and by accident year or underwriting year.
17.7.5 To comply with paragraph 17.7.1(b)(i), an insurer shall disclose either (a) or (b) as follows:
          (a) a sensitivity analysis that shows how profit or loss and equity would have been affected had changes in the relevant risk variable that were reasonably possible at the end of the reporting period occurred; the methods and assumptions used in preparing the sensitivity analysis; and any changes from the previous period in the methods and assumptions used.  However, if an insurer uses an alternative method to manage sensitivity to market conditions, such as an embedded value analysis, it may meet this requirement by disclosing that alternative sensitivity analysis and the disclosures required by paragraph 41 of AASB 7; and
          (b) qualitative information about sensitivity, and information about those terms and conditions of insurance contracts that have a material effect on the amount, timing and uncertainty of the insurer's future cash flows.

     Liability Adequacy Test

     17.8 In relation to the liability adequacy test in section 9, the financial statements shall disclose:

(a) where a deficiency has been identified, the amounts underlying the calculation performed, that is:

               (i) unearned premium liability;

               (ii) related reinsurance asset;

               (iii) deferred acquisition costs;

               (iv) intangible assets;

               (v) present value of expected future cash flows for future claims, showing expected reinsurance recoveries separately; and

               (vi) deficiency;

(b) any write-down of deferred acquisition costs under the liability adequacy test;
(c) any write-down of intangible assets under the liability adequacy test;
(d) in relation to the present value of expected future cash flows for future claims:
             (i) the central estimate of the present value of expected future cash flows;
             (ii) the component of present value of expected future cash flows related to the risk margin;
             (iii) the percentage risk margin adopted in determining the present value of expected future cash flows (determined from (i) and (ii) above);
             (iv) the probability of adequacy intended to be achieved through adoption of the risk margin; and
             (v) the process used to determine the risk margin, including the way in which diversification of risks has been allowed for;
(e) where the probability of adequacy disclosed in paragraph 17.2(d) is not the same or similar to the probability of adequacy disclosed in paragraph 17.8(d)(iv), the reasons for the difference; and
(f) where a surplus has been identified, the fact that the liability adequacy test identified a surplus.

Other Disclosures