Insurance facts and figures 2007 - PwC

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AUTHORISED REPRESENTATIVES AND INSURANCE BROKERS There may be a number of accounting considerations for authorised representatives and insurance brokers from the general application of AIFRS, depending upon the instruments and contractual arrangements brokers have in place. Commission revenue is recognised on the effective commencement or renewal dates of the policies only when additional services are not required to be rendered by the authorised representative or insurance broker. Where it is probable that additional services will be required to be rendered the commission is deferred and recognised over the period services are provided. Under AASB 132 Financial Instruments: Presentation and AASB 139, premium receivables, premium payables and premium cash collected continue to be recognised on-balance sheet, except where the terms of the contractual arrangement indicate otherwise. 118
Financial reporting 4 4.4 Annual accounts In general, a public company must file its annual shareholder accounts with ASIC within four months of year-end. Small proprietary companies are generally not required to lodge the shareholder accounts with ASIC. The shareholders’ accounts prepared under the Corporations Act must be independently audited by an Australian registered auditor. GENERAL INSURANCE The Financial Sector (Collection of Data) Act 2001 made APRA the single government collection agency for financial sector data. Therefore, all of APRA’s industry supervision acts, including the Insurance Act, were amended to remove their data collection provisions. The yearly statutory accounts, which must be audited, are required to be prepared on a different basis than the financial statements which must comply with the Corporations Act and Australian accounting standards. The key differences are outlined in the following table: Table 4.5 – Key differences in treatment between financial and prudential reporting Item AASB 1023 treatment APRA treatment Adjustment required Premiums (including unclosed business) Acquisition costs (including fire brigade charges) Reinsurance expense Claims Recoveries (reinsurance and other) Earned over the life of the policy based on the pattern of risk and LAT, providing for premium deficiency Costs are deferred and amortised over the period of benefit (i.e. premium earning) Recognised on a basis consistent with the pattern of reinsurance Includes estimating expected claims (IBNR) on earned premiums Includes estimating expected recoveries on outstanding claims Recognised as income at policy attachment date Recognised on an as-incurred basis Recognised as an expense at policy attachment date Includes estimating expected claims on written premiums Includes estimating expected recoveries on outstanding claims and premium liabilities Write back movement in unearned premiums Write back movement in DAC Write back movement in deferred reinsurance Increase liability for outstanding claims by expected losses on unexpired period of policies (premium liabilities). Adjust for differences in assumptions on discount rate and level of risk margins Increase asset for expected recoveries consistent with change in liability for outstanding claims and premium liabilities Tax Liability method Liability method The adjustments above must be tax effected 119
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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
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LPS 232 - Business Continuity Manag
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Figure 2.2 summarises the calculati
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Insurance risk capital factors Tabl
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Table 2.6 - Counterparty grades Gra
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General insurers in run-off This ap
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The key requirements of the new sta
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The solvency requirement broadly co
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AS3.04 Capital Adequacy Standard is
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The resilience reserve is intended
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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 106 and 107: 4.3 Accounting standards GENERAL IN
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 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
Page 156 and 157: 5.4 Levies and premium taxation GEN
Page 158 and 159: Table 5.4 - Stamp duty rates - Gene
Page 160 and 161: However, life insurers may be entit
Page 162 and 163: • The expenses incurred by the in
Page 164 and 165: General Insurance Supervisory Levy
Page 166 and 167: 6.1 Commonwealth legislation The in
Page 168 and 169: etail financial products is more st
Page 170 and 171: and provides guarantees and assista
Page 172 and 173: GENERAL INSURANCE BROKERS’ CODE O
Page 174 and 175: 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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