Insurance facts and figures 2007 - PwC

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4.3 Accounting standards GENERAL INSURANCE Australian general insurers are required to prepare financial statements that comply with AIFRS. AASB 4 Insurance contracts, defines what constitutes an insurance contract. AASB 1023 General Insurance Contract defines a general insurance contract (i.e. an insurance contract that is not a life insurance contract as defined in the Life Act), and a non-insurance contract (a contract regulated by the Insurance Act that does not meet the AASB 4 Insurance contracts definition of insurance). AASB 1023 prescribes accounting treatment for: • General insurance contracts (including general reinsurance contracts) that a general insurer issues and to general reinsurance contracts that it holds; • Certain assets backing general insurance liabilities; • Financial liabilities and financial assets that arise under non-insurance contracts; and • Certain assets backing financial liabilities that arise under non-insurance contracts. The treatment of the remaining balances, transactions and operations of a general insurer are prescribed by the AIFRS applicable to these transactions or balances. The following figure illustrates the key accounting standards for general insurance activities. 98
Financial reporting 4 Figure 4.2 – Key AIFRS reporting standards for general insurers Reporting of General Insurance Activities Insurance Contracts General Insurance Contracts (issued July 2004 and updated September 2005) Financial Instruments: Recognition and Measurement e.g. AASB 138 Intangible Assets & AASB 136 Impairment of Assets AASB 7 Financial Instruments Australian equivalent of IFRS 4 Insurance Contracts Applies to insurance contacts not captured by AASB 1023 or AASB 1038 such as fixed-fee service contracts, e.g. roadside assistance Applies to general insurance contracts which meet the definition per AASB 4 Enhanced disclosure requirements relating to general insurance contracts Certain modifications to accounting for general insurance contracts Applies to contracts regulated as insurance contracts which no longer meet the definition per AASB 4 Prescribes the accounting treatment of financial assets and liabilities Applies to balances such as goodwill and intangible assets for acquired business Applies to all entities Enhanced disclosers on financial risks and now managed AIFRS introduced few fundamental changes in the treatment of insurance transactions as territory requirements were essentially grandfathered by the IASB until the completion of phase II of its Insurance Project. However, a significant amount of extra disclosure is required that attempts to give the user “insights into the key risk drivers and sensitivities” in respect of insurance contracts. The key principles and disclosure requirements of AASB 1023, and any departures from the previous version, are described below. The standard is comprehensive in dealing with many accounting issues, including: • Definition of insurance risk; • Definition of an insurance contract; • Definition of premium revenue and earning pattern; • Measurement of outstanding claims; • Explicit risk margins; • Fair value accounting of investments backing general insurance liabilities; • Deferral of acquisition costs and liability adequacy testing for unearned premiums; • Accounting for inwards reinsurance; • Portfolio transfers within a group; 99
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Insurance facts and figures 2007
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Insurance facts and figures 2007
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4 Financial reporting 85 Developmen
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HIC HPPA IAA IASB IBD IBNER IBNR IC
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Introduction
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Industry information 1 Top 15 gener
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Industry information 1 Financial Po
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Industry information 1 Net Insuranc
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Industry information 1 Debt securit
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Industry information 1 General insu
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Industry information 1 Total privat
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Industry information 1 World catast
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Industry information 1 New annual p
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Industry information 1 Loss and exp
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2.1 Developments Developments over
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The requirements of these prudentia
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2.2 Framework Under the regulatory
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Although APRA is responsible for th
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2.3 Authorisation GENERAL INSURANCE
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authorisation, APRA can stipulate t
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AUTHORISED REPRESENTATIVES AND INSU
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Section 989B of the Corporations Ac
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• submits a Financial Information
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• A general insurer must develop,
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• The fitness and propriety of a
Page 56 and 57: LPS 232 - Business Continuity Manag
Page 58 and 59: Figure 2.2 summarises the calculati
Page 60 and 61: Insurance risk capital factors Tabl
Page 62 and 63: Table 2.6 - Counterparty grades Gra
Page 64 and 65: General insurers in run-off This ap
Page 66 and 67: The key requirements of the new sta
Page 68 and 69: The solvency requirement broadly co
Page 70 and 71: AS3.04 Capital Adequacy Standard is
Page 72 and 73: The resilience reserve is intended
Page 74 and 75: Funds held in a trust account can b
Page 76 and 77: If the reinsurance program has a co
Page 78 and 79: The Life Act also provides that cer
Page 80 and 81: 3.1 Framework The insurance industr
Page 82 and 83: Table 3.1 - Policyholder protection
Page 84 and 85: • given a PDS before becoming bou
Page 86 and 87: With effect from 1 July 2003, only
Page 88 and 89: As AFSL holders, insurers are requi
Page 90 and 91: Since 2001, there has been a marked
Page 92 and 93: INSURANCE BROKERS Insurance Brokers
Page 94 and 95: 4.1 Developments AASB 7 FINANCIAL I
Page 96 and 97: Australia had one of the leading-ed
Page 98 and 99: • it eliminates or significantly
Page 100 and 101: 4.2 Framework Insurers’ financial
Page 102 and 103: Figure 4.1 - Overview of relevant f
Page 104 and 105: 10 core principles that the Council
Page 108 and 109: • Non-insurance contracts; and
Page 110 and 111: value unless the claims are to be s
Page 112 and 113: Outstanding claims should have rega
Page 114 and 115: Interaction with regulatory reporti
Page 116 and 117: Life investment contract A life inv
Page 118 and 119: The income statement includes all p
Page 120 and 121: Incremental costs that are directly
Page 122 and 123: • The process used to determine t
Page 124 and 125: Premium revenue Under the revised A
Page 126 and 127: AUTHORISED REPRESENTATIVES AND INSU
Page 128 and 129: APRA prudential standards stipulate
Page 130 and 131: 4.5 Other returns GENERAL INSURANCE
Page 132 and 133: - A description of the probability
Page 134 and 135: In March 2006, the IAA released Pro
Page 136 and 137: • An annual FCR; • An appointed
Page 138 and 139: • National Claims and Policies Da
Page 140 and 141: • Levy on deregulated premium col
Page 142 and 143: • Quarterly unaudited PHIAC 4 med
Page 144 and 145: 136 5.1 Developments Tax reform in
Page 146 and 147: • under the hedging election and
Page 148 and 149: Outstanding claims A deduction is a
Page 150 and 151: Classes of income The income of a l
Page 152 and 153: Investment income A life insurer is
Page 154 and 155: HEALTH INSURANCE An organisation wh
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5.4 Levies and premium taxation GEN
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Table 5.4 - Stamp duty rates - Gene
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However, life insurers may be entit
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• The expenses incurred by the in
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General Insurance Supervisory Levy
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6.1 Commonwealth legislation The in
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etail financial products is more st
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and provides guarantees and assista
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GENERAL INSURANCE BROKERS’ CODE O
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7.1 Government authorities Governme
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PRIVATE HEALTH INSURANCE ADMINISTRA
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7.2 Industry associations ASSOCIATI
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AUSTRALIAN HEALTH SERVICE ALLIANCE
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FINANCIAL SERVICES ACCOUNTANTS ASSO
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INSTITUTE OF PUBLIC INSURANCE ASSES
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INSURANCE PREMIUM FINANCE ASSOCIATI
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NATIONAL INSURANCE BROKERS ASSOCIAT
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PRIVATE HEALTH INSURANCE OMBUDSMAN
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Registered general insurers Chubb I
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Registered general insurers Poseido
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7.5 Registered life insurers Americ
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7.6 Registered health insurers ACA
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7.7 Government insurers ACT Insuran
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PERTH 250 St George’s Terrace Tel
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