Document ID: chunk:federal_register_of_legislation:F2021N00108:clause:1_20:p1
Version: federal_register_of_legislation:F2021N00108
Segment Type: clause
Provision Reference: sch 1 cl 20 (pt 1/2)
Character Range: 20466–23356

20  Liability Report
 (1) The Licensee must commission a written report (Liability Report) in respect of each Financial Year and calculated as at the end of that Financial Year.
 (2) The Liability Report must:
 (a) be prepared by a Fellow of the Institute of Actuaries of Australia (IAA), or any body substituted thereof, with at least five years' post-qualification experience as an actuary in general insurance;
 (b) be prepared by an actuary who is not an employee or a partner of the organisation which provides financial audit services to the Licensee or who in any way has a material financial dependence on the auditor;
 (c) be prepared drawing on any available expert advice and substantially using IAA Professional Standard 302 "Valuations of General Insurance Claims", or any standard substituted thereof, as the basis of estimation, with any departure from this standard to be highlighted in the report;
 (d) be prepared using the Risk Free Rate in discounting the expected future claims payments of insurance liabilities;
 (e) be addressed by the actuary to the Commission; and
 (f) be provided by the Licensee to the Commission within 131 days of the end of the Financial Year to which it relates.
Note: If the actuary determines the Risk Free Rate using instruments other than Commonwealth Government Securities that relate to the term of the future claim liability cash flows of the Licensee, the actuary must justify the reason for doing so in the Liability Report.
 (3) The Liability Report must:
 (a) estimate the Outstanding Claim Liability of the Licensee to pay compensation and other amounts under the SRC Act in accordance with the scope of this licence as follows:
              (i) contain a recommendation for the level of provisions in the Licensee's accounts which must be made to at least the net unbiased estimate of the mean (statistical expectation) of the Outstanding Claim Liability; and
              (ii) contain a valuation of current Outstanding Claim Liability and the projected Outstanding Claim Liability in 12 months' time;
 (b) contain a breakdown of the current and non-current liability components of the Licensee's Outstanding Claim Liability as estimated in accordance with condition 20(3)(a);
 (c) contain a recommendation of the maximum reinsurance policy retention amount (Recommended Excess Amount) referred to in the Reinsurance conditions;
 (d) make an assessment of the financial capacity of the Licensee to meet amounts, from the balance sheet, up to the Recommended Excess Amount;
 (e) describe the arrangements for compliance with the Reinsurance conditions and provide an assessment by the actuary of whether the arrangements are appropriate to meet the Licensee's obligation under condition 23(1); and
 (f) contain the calculations used to determine the required amount of the Guarantee pursuant to conditions 22(7) and 22(8).
 (4)