Document ID: chunk:federal_register_of_legislation:F2023L00694:body:0:p16
Version: federal_register_of_legislation:F2023L00694
Segment Type: other
Provision Reference: 
Character Range: 41141–44343

of in force business, in the year following the reporting date. The expected maintenance cost of servicing each policy is the expected maintenance expenses appropriately adjusted for one-off expenses.
91.         The best estimate assumption for investment management expenses must be sufficient to cover the cost of managing an asset profile which would be expected to yield a return equal to the discount rate assumption.
92.         Where servicing expense assumptions are expressed in monetary amounts, the assumptions beyond the coming year must be adjusted in line with best estimate inflation assumptions.

Other assumptions
93.         The best estimate assumptions in respect of all other assumptions used in the valuation of best estimate liabilities, must be assumptions about future experience which:
(a)          are made having regard to the advice of the Appointed Actuary;
(b)          are made having regard to reasonably available statistics and other information; and
(c)          are neither deliberately overstated nor deliberately understated.

Part E – General requirements for all forms of policy and the Appointed Actuaries statement

Allocation of expenses
94.         Unless stated otherwise, the principles and requirements described in Part E of this Prudential Standard apply to:
(a)          allocating expenses across subcategories for policy liability valuation of both life insurer non-participating business and life insurer participating business;
(b)          allocating expenses across APRA product groups within each of life insurer participating and non-participating businesses and statutory funds for calculation of BEL for regulatory capital purposes; and
(c)          allocating expenses into expense categories for the regulatory capital calculation and valuation of policy liabilities of life insurer participating business under the method outlined in Part C of this Prudential Standard.
95.         The allocation of certain expenses to expense categories, and particular APRA product groups and subcategories will require greater judgement than others. Allocation of such expenses must be based on a considered analysis of the particular circumstances of the company – the objective in incurring that expense and the outcome achieved. If at the end of this process there remains doubt as to the appropriate expense category, the expense must be allocated to maintenance expenses.
96.         There will be circumstances in which an expense derives from an activity outside the normal business activities of the company and is not recurrent in nature. It is appropriate to recognise the one-off nature of such expenses for the purposes of allocating expenses into expense categories.
97.         The principles and requirements described in Part E of this Prudential Standard are equally applicable to the circumstances of allocation of the actual expenses and the expected expenses of the company.
98.         Expenses are to be allocated to the following expense categories:
(a)          acquisition expenses;
(b)          maintenance expenses;
(c)          investment expenses; and
(d)          one-off expenses.
99.         When determining BEL, each