Insurance (prudential standard) determination No. 1 of 2008 Prudential Standard GPS 001 Definitions (Cth)
Insurance (prudential standard) determination No. 1 of 2008
Prudential Standard GPS 001 Definitions
Insurance Act 1973
I, John Roy Trowbridge, Member of APRA, delegate of APRA, under subsection 32(1) of the Insurance Act 1973 (the Act), DETERMINE Prudential Standard GPS 001 Definitions in the form set out in the Schedule, which applies to all general insurers and authorised NOHCs.
This determination takes effect on 1 July 2008.
Dated 23 June 2008
[Signed]
John Trowbridge
Member
Interpretation
In this instrument:
APRA means the Australian Prudential Regulation Authority.
Authorised NOHC has the meaning given in section 3 of the Act.
general insurer has the meaning given in section 11 of the Act.
Schedule
Prudential Standard GPS 001 Definition comprises the 6 pages attached.
Prudential Standard GPS 001
Definitions
| Objective and key requirements of this Prudential Standard The purpose of this Prudential Standard is to define key terms referred to in other Prudential Standards applicable to general insurers. All Prudential Standards applicable to general insurers must be read in conjunction with this Prudential Standard. |
Authority
This Prudential Standard is made under section 32 of the Insurance Act 1973 (the Act).
Application
This Prudential Standard takes effect on 1 July 2008.
Unless the contrary intention appears, definitions in this Prudential Standard apply to this Prudential Standard and all other Prudential Standards made under section 32 of the Act (collectively GI Prudential Standards) and to all prudential practice guides relating to general insurance made by APRA.
Interpretation
Certain terms referred to in the GI Prudential Standards are defined in the Act. By operation of subsection 13(1) of the Legislative Instruments Act 2003, terms not defined in the GI Prudential Standards but which are defined in the Act have the same meaning as in the Act.
The different categories of insurers referred to in the GI Prudential Standards are defined as follows:
Category A insurer means an insurer incorporated in Australia. This category excludes all insurers falling within any of the other categories. For the purposes of clarification, wholly owned subsidiaries of corporate groups that are not insurance groups fall into this category where they do not already fall into another category of insurer under this Prudential Standard. Category A insurers could be mutual companies or shareholder companies.
Category B insurer means an insurer that is:
(a)incorporated in Australia; and
(b)a subsidiary of a local or a foreign insurance group.
Category B insurers are part of a local or foreign insurance group. They could be subsidiaries of mutual or shareholder companies. An insurance group captive is not a Category B insurer.
Category C insurer means a ‘foreign general insurer’ defined under subsection 3(1) of the Act. A Category C insurer is a foreign insurer operating as a foreign branch in Australia and could be a branch of a foreign mutual or shareholder company.
Category D insurer means an insurer incorporated in Australia that:
(a)is owned by an industry or a professional association, or by the members of the industry or professional association or a combination of both; and
(b)only underwrites business risks of the members of the association or those who are eligible, under the articles of association or constitution of the association, to become members of the association; but
(c)is not a medical indemnity insurer as defined under the Medical Indemnity Act 2002.
Category D insurers are often referred to as ‘association captives’ and could be mutual companies or shareholder companies.
Category E insurer means an insurer incorporated in Australia that is a:
(a)corporate captive; or
(b)partnership captive.
Category E insurers, often referred to as ‘sole parent captives’, will generally be shareholder companies.
Corporate captive means an insurer that:
(a)is owned by a single company or a group of related bodies corporate; and
(b)exists for the purpose of underwriting risks of the parent company or members of a group of related companies, which may include the risks of joint venture partners and contractors of the members of the group of companies.
Corporate captives include insurance group captives.
Insurance group captive is an insurer that:
(a)is a subsidiary of an insurer or an authorised NOHC; and
(b)exists for the purpose of reinsuring the risks of the insurer or members of the insurance group, which may include the risks of joint venture partners of the members of the insurance group.
Partnership captive means an insurer that:
(a)is owned by a partnership; and
(b)exists for the purpose of underwriting the business risks of the partners and/or the partnership.
Other key terms referred to in the GI Prudential Standards are defined as follows:
Agent in Australia has the same meaning as in the Act.
Appointed Auditor means an auditor appointed under paragraph 39(1)(a) of the Act.
Appointed Actuary means an actuary appointed under paragraph 39(1)(b) of the Act;
APRA-authorised reinsurer means an insurer carrying on reinsurance business. For the purposes of this definition, a Lloyd’s underwriter as defined under the Act is an APRA-authorised reinsurer if it carries on reinsurance business.
Auditing and Assurance Standards is a reference to the Auditing and Assurance Standards issued by the Auditing and Assurance Standards Board as may be amended from time to time.
Australian Accounting Standards is a reference to the Australian Accounting Standards issued by the Australian Accounting Standards Board as may be amended from time to time.
Authorised deposit-taking institution has the same meaning as in the Banking Act 1959.
Authorised NOHC has the same meaning as in the Act.
Business day has the same meaning as in the Act.
Capital standards refers collectively to prudential standards relating to capital adequacy.
Corporate agent has the same meaning as in the Act.
Corporate group is a group of companies comprising two or more companies that are related bodies corporate within the meaning of section 50 of the Corporations Act 2001 (Corporations Act).
Director has the same meaning as in the Act.
Expected reinsurance recoveries means any amounts due to an insurer from a reinsurer that arise from the recognition of Premiums Liabilities referred to in the capital standards and Prudential Standard GPS 310 Audit and Actuarial Reporting and Valuation. This is distinguished from reinsurance recoverables and forms part of reinsurance assets.
Insurance group means a group of companies comprising:
a)a company that is either:
(i) an insurer; or
(ii) an authorised non-operating holding company of an insurer; and
b)one or more subsidiary companies or parent companies of the company referred to in subparagraph (a)
within a corporate group. There may be more than one insurance group within a corporate group.
Insurer means a general insurer as defined in the Act.
General insurer has the same meaning as in the Act.
Minimum capital requirement (MCR) is as defined in Prudential Standard GPS 110 Capital Adequacy.
Non-APRA-authorised reinsurer means any reinsurer that is not an APRA-authorised reinsurer.
Non-operating holding company, or NOHC, has the same meaning as in the Act.
Prudential requirements includes requirements imposed by the Act, prudential standards, the Financial Sector (Collection of Data) Act 2001 (the Collection of Data Act), reporting standards, conditions on the insurer’s authorisation and any other requirements imposed by APRA in writing.
Prudential matters has the same meaning as in the Act.
Reinsurance includes retrocession and reinsurer includes retrocessionaire.
Reinsurance assets refers to the aggregate of any amounts due to an insurer from a reinsurer and includes:
(a)reinsurance recoverables; and
(b)expected reinsurance recoveries.
Reinsurance recoverables means any amounts due to an insurer from a reinsurer that arise from the recognition of Outstanding Claims Liabilities referred to in the capital standards and Prudential Standard GPS 310 Audit and Actuarial Reporting and Valuation. This is distinguished from expected reinsurance recoveries and forms part of reinsurance assets.
Related firms, in the context of Appointed Auditors, Appointed Actuaries and Reviewing Actuaries, means either two or more firms, or a firm and a body corporate, that have common ownership or management, or where one has a substantial shareholding in the other.
Related body corporate, or related company, has the same meaning as in section 50 of the Corporations Act.
Responsible auditor is as defined in Prudential Standard GPS 520 Fit and Proper.
Reviewing Actuary means an actuary appointed by an insurer for the purpose of reviewing the Insurance Liability Valuation Report under Prudential Standard GPS 310 Audit and Actuarial Reporting and Valuation;
Run-off insurer means an insurer that is closed to new business and has not written renewal business for a period of at least 12 months.
Senior manager has the same meaning as in the Act.
Small insurer means an insurer that satisfies the following criteria:
(a)the gross insurance liabilities of the insurer are less than $20 million when valued in accordance with Prudential Standard GPS 310 Audit and Actuarial Reporting and Valuation; and
(b)the gross insurance liabilities of the insurer do not include a material amount in respect of long-tail business (comprising classes of business where the claims are typically settled more than one year after the date of occurrence of the event that gives rise to the claim).
Subsidiary means a subsidiary as defined under the Corporations Act.
Yearly statutory accounts has the same meaning as in the Act.
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