Financial Sector (Collection of Data) (reporting standard) determination No. 16 of 2007 MRS 310.2 Claims Expense and Reinsurance Recoveries (Cth)

Financial Sector (Collection of Data) (reporting standard) determination No. 16 of 2007

Reporting standard MRS 310.2 Claims Expense and Reinsurance Recoveries

Financial Sector (Collection of Data) Act 2001

I, Charles Watts Littrell, a delegate of APRA, under paragraph 13(1)(a) of the Financial Sector (Collection of Data) Act 2001 and subsection 33(3) of the Acts Interpretation Act 1901:

• REVOKE the Reporting Standard MRS 310.2: Claims Expense and Reinsurance Recoveries; and

• DETERMINE the Reporting Standard MRS 310.2 Claims Expense and Reinsurance Recoveries in the form set out in the Schedule, which applies to the financial sector entities referred to in paragraph 1 of the reporting standard.

Under section 15 of the Act, I DECLARE that the reporting standard shall begin to apply to those financial sector entities on the later of 30 June 2007 and the date of registration on the Federal Register of Legislative Instruments.

Dated   29 June 2007

[Signed]

Charles Littrell

Executive General Manager

Policy, Research and Statistics

Interpretation

In this Determination

APRA means the Australian Prudential Regulation Authority.

Schedule        

Reporting Standard MRS 310.2 Claims Expense and Reinsurance Recoveries comprises 10 pages commencing on the following page.

Reporting Standard MRS 310.2

Claims Expense and Reinsurance Recoveries

Objective of this reporting standard

This reporting standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001. It requires medical defence organisations (‘MDOs’, as defined in paragraph 17) to report to APRA on a half-yearly basis a Statement of Claims Expense and Reinsurance Recoveries.

This reporting standard outlines the overall requirements for the provision of this information to APRA. It should be read in conjunction with reporting form MRF 310.2 Claims Expense and Reinsurance Recoveries and the instructions to that form (each of which is attached and forms part of this reporting standard).

Application

1.     This reporting standard applies to all MDOs. 

Information required

2.     An MDO must, after the end of each reporting period, and in accordance with the instructions, duly complete the form in respect of the reporting period, and provide the completed form (the ‘report’) to APRA by the due date.

Method of submission

3.     Reports must be given to APRA either:

(a)in electronic form, using one of the electronic submission mechanisms provided by the ‘Direct to APRA’ (also known as ‘D2A’) application;

(b)in Microsoft Excel format on a 3.5 inch diskette, which must be posted to APRA’s head office at Level 26, 400 George Street, Sydney, NSW 2000; or

(c)manually completed on paper, which must be faxed or mailed to APRA’s head office.

Note: the Direct to APRA application software and forms may be obtained from APRA but will not be available immediately upon commencement of this standard. Therefore, initially, only methods of submission (b) and (c) will be available.

Reporting periods

4.     Subject to paragraphs 5 and 6, the reporting periods are the half-yearly period ending on 30 June 2007 and each successive half-yearly period (ending on 31 December or 30 June) after that.

5.     APRA may, by notice in writing, change the reporting periods for a particular MDO so that it is required to report in respect of half-yearly reporting periods based upon the MDO’s own year of income.

Note: this will be relevant where the MDO’s year of income does not end on 30 June or 31 December.

6.     APRA may, by notice in writing change the reporting periods for a particular MDO to require it to provide the information:

(a)more frequently (APRA may require this when, having regard to the particular circumstances of the MDO, APRA considers it necessary or desirable for the MDO to report more frequently for the purposes of monitoring the financial position of the MDO); or

(b)less frequently (APRA may do so when, having regard to the particular circumstances of the MDO and the extent to which its financial position requires monitoring, it is unnecessary to require it to report on a half-yearly basis).

Due dates

7.     Reports under this standard must be provided to APRA no later than:

(a)in the case of a report in respect of a half-yearly period ending on the last day of the MDO’s year of income – 4 months after that day; and

(b)in the case of all other reports – 20 business days after the end of the reporting period.

8.     APRA may, in writing, grant an MDO an extension of the due date for submission of a report, in which case the new due date will be the date on the notice of extension.

Audit and auditor’s certificate

9.     Reports under this standard must be the product of processes and controls that have been reviewed and tested by a registered company auditor. This will require the auditor to review and test the systems, processes, and controls supporting the reporting of the information to ensure that they produce accurate data and are otherwise reliable. This review and testing must be done on an annual basis or more frequently if necessary to enable the approved auditor to form an opinion as to the accuracy and reliability of the data.

10.   In relation to each year of income of an MDO (including a year of income ending on 30 June 2007), the MDO must provide APRA with an annual certificate, signed by a registered company auditor, which must either:

(a)state that in the auditor’s opinion the information provided to APRA under this standard in respect of the year of income is accurate and reliable; or

(b)state that in the auditor’s opinion the information provided to APRA under this standard in respect of the year of income is not accurate or reliable and specify the ways in which the information is not accurate or reliable and the grounds upon which the auditor has come to this conclusion.

A certificate under this paragraph must be provided to APRA no later than four months after the last day of the year of income to which it relates. It may be combined with certificates under corresponding paragraphs of other reporting standards (made under section 13 of the Financial Sector (Collection of Data) Act 2001) applying to the MDO.

Authorisation

11.   Reports under this standard must also be subject to processes and controls developed by the MDO for the internal review and authorisation of that information. It is the responsibility of the board and senior management of the MDO to ensure that an appropriate set of policies and procedures for the authorisation of data submitted to APRA is in place.

12.   If an MDO submits a report under this standard using the ‘Direct to APRA’ software, it will be necessary for an officer of the MDO to digitally sign, authorise and encrypt the relevant data. For this purpose APRA’s certificate authority will issue ‘digital certificates’, for use with the software, to officers of the insurer who have authority from the insurer to transmit the data to APRA.

13.   If a report under this standard is completed in Microsoft Excel format and provided on diskette, the diskette must be sent to APRA with a letter signed by either the Principal Executive Officer or Chief Financial Officer of the MDO. 

14.   If a report under this standard is completed and provided in paper form, it must be signed by either the Principal Executive Officer or Chief Financial Officer of the MDO.

Minor alterations to forms and instructions

15.   APRA may make minor variations to:

(a)the form, and the instructions to the form, to correct technical, programming or logical errors, inconsistencies or anomalies; or

(b)the instructions, to clarify their application to the form

without changing any substantive requirement in the form or instructions.

16.   If APRA makes such a variation it must notify affected MDOs in writing.

Interpretation

17.   In this standard:

APRA means the Australian Prudential Regulation Authority established under the Australian Prudential Regulation Authority Act 1998.

business day means an ordinary business day, excluding weekends and public holidays.

Chief Financial Officer means the person having the function of chief financial officer of the MDO, by whatever name called, and whether or not he or she is a member of the governing board of the MDO, and if there is no such person means a person who performs similar functions to those commonly performed by a chief financial officer.

due date means the relevant date under paragraph 7 or 8.

form means the attached form.

instructions means the attached instructions.

MDO means a corporation to which section 5A of the Financial Sector (Collection of Data) Act 2001 applies (but, for the avoidance of doubt, does not include a general insurer within the meaning of the Insurance Act 1973).

Principal Executive Officer means the principal executive officer of the MDO for the time being, by whatever name called, and whether or not he or she is a member of the governing board of the MDO.

registered company auditor has the meaning in section 9 of the Corporations Act 2001.

Note: That section provides that registered company auditor:

(a) means a person registered as an auditor under Part 9.2 of the Corporations Act; and

(b)     in relation to a body corporate that is not a company—includes a person qualified to act as the body's auditor under the law of the body's incorporation.

report has the meaning given in paragraph 2.

reporting period means the relevant period under paragraph 4, 5 or 6

year of income in relation to an MDO means the accounting period adopted by the MDO for the purposes of the Income Tax Assessment Act 1936 or for taxation purposes generally (whether or not that period is the same as the standard financial year beginning on 1 July and ending on 30 June).

Reporting Form MRF 310.2

Claims Expense and Reinsurance Recoveries

Instruction Guide

Introduction

This form requires Medical Defence Organisations (MDOs) to report information about claims expense, reinsurance recoveries and claims paid.

Reporting Obligations

MDOs are required to report on a half-yearly basis (that is, six monthly intervals), based on their financial year.

For annual reporting, MDOs must lodge a form within four months of the end of their financial year.  The information required on an annual basis must be reported as at the last day of the reporting period on a financial year-to-date basis of the MDO.

For half-yearly reporting (that is, the half-year that does not correspond with the MDO’s financial year end), MDOs must lodge a form within 20 business days of the end of that six month period.

Audit Requirements

This form must be subject to audit review and testing on an annual basis or more frequently if necessary to enable the auditor to form an opinion on the accuracy and reliability of the data.  The auditor must provide a certificate to the MDO specifying whether, in their opinion, the data provided by the MDO are reliable.  The MDO must submit this certificate to APRA on an annual basis.

The scope and nature of audit testing required is outlined in the applicable Auditing and Assurance Guidance Statement issued by the Auditing and Assurance Standards Board.

Definitions

Definitions for data reporting items required by this form have been provided where possible in the instructions under the section headed ‘Specific Instructions’.

Basis of Preparation

Unit of Measurement

This form is to be prepared in thousands of Australian dollars (AUD).  Amounts denominated in a currency other than Australian currency are to be converted to AUD in accordance with AASB 121 The Effects of Changes in Foreign Exchange Rates (AASB 121).

Related party/entity

Related parties/entities are to be interpreted in accordance with AASB 124 Related Party Disclosures (AASB 124).

Parent

Parent entity is to be interpreted in accordance with AASB 127 Consolidated and Separate Financial Statements (AASB 127).

Subsidiaries

Subsidiaries are to be interpreted in accordance with AASB 127.

Associates

Associates are to be interpreted in accordance with AASB 128 Investments in Associates (AASB 128).

Joint ventures

Joint ventures are to be interpreted in accordance with AASB 131 Interests in Joint Ventures (AASB 131).

Specific Instructions

Classes of Business

Medical Indemnity

This includes medical indemnity cover provided on a discretionary basis (prior to the commencement of the Medical Indemnity (Prudential Supervision and Product Standards) Act 2003 on 1 July 2003) that indemnifies a person for claims arising from that person’s practice as a medical professional.

Other

Any other business provided on a discretionary basis that indemnifies a person for claims arising from a specified event.

1. Total Claims Expense

This reflects the claims expense relating to claims that occur and are paid in the same financial period and also movements in the OCL).

For claims expense relating to movements in the OCL, the OCL as reported in MRF 300.0 Statement of Financial Position (MRF 300.0) is to be used, not necessarily the OCL reported in MRF 210.0 Outstanding Claims Liabilities (MRF 210.0) if there is a difference between the two. 

The total amount of claims expense reported in this form must match the component of total claims expense reported in MRF 310.0 Statement of Financial Performance (MRF 310.0).

2. Reinsurance recoveries received/receivable

Report the amount of reinsurance recoveries receivable in relation to those claims recognised in the calculation of the gross claims expense.

3. Other recoveries revenue received/receivable

Report the amount of other recoveries receivable in relation to those claims recognised in the calculation of the gross claims expense.

4. Reinsurance recoveries received - cash flow basis

Report the amount of reinsurance recoveries received over the reporting period (on a year-to-date basis) in aggregate for all business (i.e. disclosure in relation to individual class of business is not required).  Do not include reinsurance recoveries recognised on an accrual basis, as that is recognised in column 2.

This relates to all reinsurance recoveries received on a cash flow basis in the current financial year, regardless of the financial year in which the reinsurance recovery may have been recognised as revenue (i.e. a prior financial year).   Note: as a proxy the basis required by AASB 107 Cash Flow Statements (AASB 107) may be used.

5. Claims paid - cash flow basis

Report the amount of claims actually paid over the reporting period (on a year-to-date basis) in aggregate for all business (i.e. disclosure of claims paid in relation to individual class of business is not required). This relates to all claims paid on a cash flow basis in the current financial year, regardless of the financial year in which the claim may have been recognised as an expense (i.e. a prior financial year).  Note: as a proxy the basis required by AASB 107 can be used.

Related Party Disclosure

Amounts due from or payable to a related entity are to be disclosed where indicated in the form.