Financial Sector (Collection of Data) (reporting standard) determination No. 39 of 2007 Reporting standard DRS 310.3 Insurance by Class (Cth)

Case

Financial Sector (Collection of Data) (reporting standard) determination No. 39 of 2007

Reporting standard DRS 310.3 Insurance by Class

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), DETERMINE the Reporting Standard DRS 310.3 Insurance by Class in the form set out in the Schedule, which applies to all discretionary mutual funds.

This instrument takes effect on the date of registration on the Federal Register of Legislative Instruments.

Dated 14 December 2007

[signed]

Charles Littrell

Executive General Manager

Policy, Research and Statistics

Interpretation

In this Determination

APRA means the Australian Prudential Regulation Authority.

discretionary mutual fund has the meaning given in the Act.

Federal Register of Legislative Instruments means the register established under section 20 of the Legislative Instruments Act 2003.

Schedule            

Reporting Standard DRS 310.3 Insurance by Class comprises the 14 pages commencing on the following page.


Reporting Standard DRS 310.3

Insurance by Class

Objective of this reporting standard

This reporting standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001. It requires all DMF entities to provide to APRA, on an annual basis, the Form DRF 310.3 Insurance by Class.

This reporting standard outlines the overall requirements for the provision of this information to APRA. It should be read in conjunction with the form and the associated instructions (which are attached and form part of this reporting standard).

Purpose

  1. Information collected in Form DRF 310.3 Insurance by Class (Form DRF 310.3) is used by APRA for the purpose of monitoring bodies in the finance sector.

    Application and commencement

  2. This reporting standard applies to all DMF entities from 1 January 2008.

    Information required

  3. A DMF entity must provide APRA with the information required by Form DRF 310.3, in respect of:

(a)      the DMF; and

(b)     in those cases where a DMF comprises a number of individual subfunds and each subfund has a distinct bank account and financial statement, each subfund

for each reporting period.

Forms and method of submission

  1. The information required by this reporting standard must be given to APRA either:

(a) in electronic form using the ‘Direct to APRA’ application, applying one of the electronic submission mechanisms under that application; or

(b) by manually completing Form DRF 310.3 on paper and mailing the completed form to APRA’s head office at Level 26, 400 George Street, Sydney, New South Wales.

  1. Where the information is submitted by means of an agent to whom the DMF entity has outsourced the function of providing the information on the DMF entity’s behalf, the agent may only provide the information in accordance with paragraph 4(b) if the agent has contacted APRA and advised that the agent cannot submit the information in electronic form under paragraph 4(a).

    Note: the ‘Direct to APRA’ software and relevant forms is obtained from APRA.

    Reporting periods and due dates

  2. A DMF entity must provide the information required by this reporting standard in respect of each year of income of the DMF.

  3. APRA may, by notice in writing, change the reporting periods, or specified reporting periods, for a particular DMF entity to require it to provide the information:

(a) more frequently (if, having regard to the particular circumstances of the DMF entity, APRA considers it necessary or desirable to obtain information more frequently); or

(b) less frequently (if, having regard to the particular circumstances of the DMF entity, APRA considers it unnecessary to require the DMF entity to provide the information as frequently as provided by paragraph 6).

  1. The information must be provided to APRA:

(a)      if the end of the year of income of the DMF falls between 1 January 2008 and 30 June 2008, inclusive – by no later than 30 October 2008; or

(b)     if the end of the year of income of the DMF falls after 30 June 2008 –within 4 months after the end of that year of income of the reporting period to which it relates.

  1. APRA may grant an extension of a due date in writing, in which case the new due date for the provision of the information will be the date on the notice of extension.

    Quality control

  2. The information provided under this reporting standard must be the product of processes and controls developed by the DMF entity for the internal review and authorisation of that information. It is the responsibility of the DMF entity to ensure that an appropriate set of policies and procedures for the authorisation of data submitted to APRA is in place.

    Authorisation

  3. If the officer of a DMF entity provides the information required by this reporting standard under paragraph 4, then:

(a) if the officer uses the ‘Direct to APRA’ application under paragraph 4(a), an officer must digitally sign, authorise and encrypt the information (for which purpose APRA’s certificate authority will issue digital certificates, for use with the ‘Direct to APRA’ application, to officers who have authority from the DMF entity to transmit data to APRA); and

(b)     if the DMF entity provides the information on paper under paragraph 4(b), the completed form must be signed by an officer of the DMF entity who is authorised by the DMF entity to complete and lodge the form.

  1. If the DMF entity provides the information required by this reporting standard through an agent under paragraph 5, then:

(a)      the agent will not be required to sign or authorise the information; but

(b)     the DMF entity must:

  1. obtain from the agent a paper copy of the completed form as provided to APRA (whether it was submitted electronically or in paper form); and

  2. cause the paper copy to be signed by an officer of the DMF entity authorised by the DMF entity to sign the paper copy; and

  3. lodge the signed paper copy with APRA by mailing the completed form to APRA’s head office at Level 26, 400 George Street, Sydney, New South Wales, by the relevant due date.

  1. If information under this reporting standard is provided in paper form, it must be signed on the front page of the relevant completed form by either:

(a)      the Principal Executive Officer of the DMF entity; or

(b)     the Chief Financial Officer of the DMF entity (whatever his or her official title may be); or

(c)      the trustee.

Minor alterations to form and instructions

  1. APRA may make minor variations to:

(a)      a form that is part of this reporting standard, and the instructions to such a form, to correct technical, programming or logical errors, inconsistencies or anomalies; or

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

without changing any substantive requirement in the form or instructions.

  1. If APRA makes such a variation it must notify in writing each DMF entity that is required to report under this reporting standard.

    Interpretation

    16.     In this reporting standard:

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

    DMF has the meaning given by section 5 of the Financial Sector (Collection of Data) Act 2001;

    due date means the relevant due date under paragraph 8 or, if applicable, paragraph 9;

    DMF entity is a person or body that controls a DMF, and may include any of the following:

(a)      a body corporate;

(b)      a partnership;

(c)      an unincorporated body;

(d)      an individual;

(e)      for a trust that has only one trustee – the trustee;

(f)      for a trust that has more than one trustee – the trustees together;

officer in relation to a DMF entity means, where relevant:

(a)      a director or secretary of the entity; or

(b)      a person:

  1. who makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the entity; or

  2. who has the capacity to affect significantly the entity’s financial standing;

    reporting period means a period mentioned in paragraph 6 or, if applicable, paragraph 7;

    year of income means the financial year of the DMF.




    Reporting Form DRF 310.3

    Insurance by Class

    Instruction Guide

    Introduction

    This form requires Discretionary Mutual Funds (DMFs) to report information about insurance purchased which relates to cover provided to the members.

    Level of reporting

    For the purposes of the instructions below the term DMF includes reporting at the legal entity or trust or subfund level. The same level of reporting must be used throughout this form.

    DMFs will generally need to submit data at the legal entity or trust level. Some DMFs, however, operate with multiple subfunds and in those cases where the DMF has separate sub fund bank accounts and sub fund financial statements, this reporting form will need to be submitted for each sub fund. For example, if an entity has 2 subfunds: subfund A and subfund B. Subfund A and also subfund B will need to complete this reporting form.

    Reporting obligations

    The DMF is required to report information relating to a financial year in the forms. For financial years ending on or between 1 January 2008 and 30 June 2008 DMFs must lodge this form at the latest by 30 October 2008. For financial years ending after 30 June 2008 DMFs must lodge their reporting forms at the latest by 4 months after the DMF financial year end

    Audit requirements

    The reporting form does not need to be audited. However the data should be based on the DMF’s financial statements and must be subject to the same processes and controls that cover the review and authorisation of that accounting data. It is the responsibility of the board or trustee or senior management of the DMF to ensure that the information lodged with APRA is accurate and complete.

    Method of submission

    Forms will be submitted electronically to APRA using ‘Direct to APRA’ (D2A) software unless alternative arrangements are made with APRA.

    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

    Accounting basis of preparation

    Important: Report all items using the same recognition and measurement basis that is used in your financial statements. The instructions below are specific to entities that are reporting and complying with all applicable Australian Accounting Standards. In those cases where an entity does not comply with a AASB standard specifically identified below, report on the accounting basis used in your financial statements.

    Unit of measurement

    This form is to be presented in Australian dollars (AUD), rounded to thousands of dollars, with no decimal places. 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.

    Specific Instructions

    Insurance

    The table is to be completed by class of business providing the detail in respect of the indicated below:

    ·Maximum policy period

    ·Maximum any one risk accepted by DMF

    ·Maximum any one risk accepted by insurer

    ·Highest risk retention

    ·Maximum event exposure

    ·Maximum event loss

    ·Expected insurance recovery from maximum event loss

    ·Maximum event retention


  1. Class of business

    Please refer to Appendix 1 for the definitions for the classes of business.

  2. Maximum policy period

    Report the maximum number of months of current insurance cover provided by the insurer to the DMF.

  3. Maximum any one risk accepted by DMF

    Report the gross maximum value of any one risk accepted by the DMF (before effecting insurance).

  4. Maximum any one risk accepted by insurer

    Report the maximum value of any one risk accepted by the insurer(s) of amount stated in item 3 above.

  5. Highest risk retention

    This is automatically calculated by the form and represents the difference between ’Maximum any one risk accepted by DMF’ and ‘Maximum any one risk accepted by insurer’.

  6. Maximum event exposure

    Report the value of the maximum event exposure based on total gross sum insured amounts for any one risk aggregated to determine the maximum per event exposure (as appropriate).

  7. Maximum event loss

    Report the value of the maximum event loss based on exposures as per item 6 above and applying your probable maximum loss methodology as applicable to determine your maximum event loss, before allowing for insurance recoveries.

  8. Expected insurance recovery from maximum event loss

    Report the value of the expected insurance recovery from maximum event loss.

  9. Maximum event retention

    This is automatically calculated by the form and represents the difference between ‘Maximum event loss’ and ‘Expected insurance recovery from maximum event loss’.

    Appendix 1: Definitions of classes of business

    The classes of cover are as follows:

  1. Houseowners/Householders (H & H)

    This class includes:

    ·Contents;

    ·Personal property;

    ·Arson; and

    ·Burglary.

    Public liability normally attaching to these products are to be separated and included in public and product liability class of business – item (XII).

  2. Commercial motor vehicle

    Motor vehicle cover (including third party property damage) other than cover covering vehicles defined below under domestic motor vehicle. It includes long and medium haul trucks, cranes and special vehicles and cover for fleets.

  3. Domestic motor vehicle

    Motor vehicle cover (including third party property damage) covering private use motor vehicles including utilities and lorries, motor cycles, private caravans, box and boat trailers and other vehicles not normally covered by business or commercial cover.

  4. Travel

    Cover against losses associated with travel including loss of baggage and personal effects, losses on flight cancellations and overseas medical costs.

  5. Fire and Industrial Special Risks (ISR)

    Fire - Includes all cover normally classified as 'Fire' and includes:

    ·sprinkler leakage;

    ·subsidence;

    ·windstorm;

    ·hailstone;

    ·crop;

    ·arson; and

    ·loss of profits and any extraneous risk normally covered under fire cover, e.g. flood.

    ISR - Business cover which typically covers:

    ·Material damage - physical damage to property and assets

    ·Money/Crime - handling of cash, and internal crime

    ·Theft/Burglary - external crime of all sorts

    ·Liability - both public (damage to third parties) and product (recall of items)

    ·Business interruption - this covers the loss of profits due to a variety of external reasons.

    When an organisation has a turnover which is substantial (as an example over $5 million) this business is covered under Industrial Special Risks (ISR) cover. Below that value, it is typically placed under a Business Pack cover which arguably is much simpler, but typically does not offer as wide a cover The ISR cover is a base contract which has been designed to be tailored to meet the individual needs of a business and this is done by way of endorsement.

  6. Marine

    Includes marine hull (including pleasure craft), marine cargo (including sea and inland transit cover).

  7. Aviation

    Aviation (including aircraft hull and aircraft liability).

  8. Mortgage

    Cover against losses arising from the failure of debtors to meet financial obligations to creditors or under which payment of debts is guaranteed. It includes lease guarantee.

  9. Consumer credit

    Cover to protect a consumer's ability to meet the loan repayments on personal loans and credit card finance in the event of death or loss of income due to injury, illness or unemployment.

  10. Other accident

    Includes the following types of cover:

    ·Miscellaneous accident (involving cash in transit, theft, loss of money);

    ·All risks (baggage, sporting equipment, guns);

    ·Engineering when not part of ISR or fire cover;

    ·Plate glass when not part of packaged cover (e.g. houseowners /householders)

    ·Guarantee;

    ·Live stock;

    ·Pluvius; and

  • Sickness and accident (which provides stated benefits where the beneficiary is killed or suffers loss of specific parts of the body or is prevented from carrying out the beneficiaries normal occupation. In addition, regular benefits may be paid over a short period of time (typically less than 3 years), noting that continuous disability cover is considered to be life cover).

  1. Other

    All other cover not specifically mentioned elsewhere. It includes, for example:

    All guarantees (e.g. fidelity guarantee)

    Trade credit;

  • Extended warranty (includes cover by a third party for a period in excess of the manufacturer's or seller’s normal warranty;

  • Kidnap and ransom; and

  • Contingency.

  1. Public and product liability

    Public liability covers legal liability to the public in respect of bodily injury or property damage arising out of the operation of the member’s business. Product liability includes cover that provides for compensation for loss and or injury caused by, or as a result of, the use of goods and also environmental clean-up caused by pollution spills where not covered by fire and ISR cover.

    Also will include builders warranty cover.

    Includes public liability attaching to houseowners/householders cover.

  2. Professional indemnity (PI)

    Includes Directors' and Officers' liability cover plus legal expense cover. Cover for legal expense is generally included in this type of cover.

  3. Life and continuous disability

    Includes life and continuous disability cover.

    Continuous disability is cover:

    (a)that is, by its terms, to be of more than 3 years' duration; and

    (b)under which a benefit may be payable in the event of:

    (i)the death, by accident or by some other cause stated in the cover, of the person whose life is covered; or

    (ii)injury or disability as a result of accident or sickness; or

    (iii)the person covered being found to have a stated condition or disease.

Actions
Download as PDF Download as Word Document
Cases Citing This Decision

0

Cases Cited

0

Statutory Material Cited

0