Financial Sector (Collection of Data) Determinations Nos. 30 to 36 of 2005 – reporting standards applying to general insurers and Lloyd’s for the purposes of the National Claims and Policies Database
EXPLANATORY STATEMENT
Issued by the authority of the Australian Prudential Regulation Authority (‘APRA’)
Financial Sector (Collection of Data) Act 2001 (‘FSCOD Act’), s 13(1)(a) and s 15
Acts Interpretation Act 1901, s 33(3)
Subsection 13(1) of the FSCOD Act provides that APRA may, by writing, determine reporting standards that are required to be complied with by financial sector entities. Section 15 gives APRA power to make a formal declaration of the date when reporting standards begin to apply. (Although s 15(2) provides for such declarations to be published in the Gazette, s 56(1) of the Legislative Instruments Act 2003 provides that this requirement is fulfilled by registration on the Federal Register of Legislative Instruments.) Subsection 33(3) of the Acts Interpretation Act gives APRA power to revoke reporting standards so made.
Financial Sector (Collection of Data) Determinations Nos.30 to 32 of 2005 determine reporting standards which will apply to general insurers (within the meaning of the Insurance Act 1973) and require them to provide information in relation to public liability and professional indemnity insurance for the purposes of APRA’s National Claims & Policies Database (‘NCPD’). Determinations Nos. 33 to 35 of 2005 apply to Lloyd’s and require it to provide similar information for the NCPD. Determination No. 36 of 2005 revokes the existing reporting standards created for the purposes of the NCPD, which the new ones replace.
The purpose of revoking and replacing the old reporting standards is to update the technical data specifications, formalise an arrangement for the NCPD data to be provided to APRA via an agent appointed for that purpose, and update the drafting style. The reporting periods and requirements are otherwise the same as they were under the old reporting standards. In remaking the standards, APRA has not redetermined requirements relating to the period 1 January 2003 to 30 June 2004, as they are now redundant.
To simplify compliance with the Legislative Instruments Act 2003, APRA has chosen to revoke and replace the pre-existing reporting standards, rather than amend them.
The new reporting standards will have effect in respect of reporting periods ending on or after 30 June 2005. They will formally begin to apply (under s 15 of the FSCOD Act) on the later of 1 July 2005 and the date of registration on the register of legislative instruments. Each old reporting standard will be revoked on the date the new standard replacing it comes into effect.
Financial Sector (Collection of Data) Determination No. 30 of 2005 - Reporting Standard GRS 800.1 (2005): Policy Data: Public and Product Liability and Professional Indemnity Insurance
This reporting standard requires general insurers that write public liability, product liability or professional indemnity insurance policies to provide data on policies in force during a reporting period. The reporting periods are 6 month periods.
As with the old reporting standard, the information collected includes the class of business covered by the policy, the policy basis, its current status, the premium earned from the policy and details about the insured party, amongst other details.
The new reporting standard formalises a decision made some months ago that data be lodged with APRA’s agent (appointed under section 47 of the Australian Prudential Regulation Authority Act 1998), Fujitsu Australia Ltd (a possibility envisaged in the old reporting standard). Amendments have also been made to the technical data specifications attached to the standard.
A Regulation Impact Statement is not required for this reporting standard as the changes are of a minor or machinery nature.
Financial Sector (Collection of Data) Determination No. 31 of 2005 - Reporting Standard GRS 800.2 (2005): Claim Data: Public and Product Liability and Professional Indemnity Insurance
This reporting standard requires general insurers that write public liability, product liability or professional indemnity insurance policies to provide data on claims made or not settled during a half-yearly reporting period.
As with the old reporting standard, the information collected includes the class of business covered by the policy, the policy basis, its current status, the dates of loss and report, the jurisdiction of the claim, the nature of the loss and details of the likely case estimate, amongst other information.
The reporting standard formalises the decision that data be lodged with APRA’s agent. Amendments have also been made to the technical data specifications attached to the standard.
A Regulation Impact Statement is not required for this reporting standard as the changes are of a minor or machinery nature.
Financial Sector (Collection of Data) Determination No. 32 of 2005 - Reporting Standard GRS 800.3 (2005): Facility Business Data: Public and Product Liability and Professional Indemnity Insurance
This reporting standard requires general insurers that write public liability, product liability or professional indemnity facility business to provide data on facility business where the insurer is on-risk during a half-yearly reporting period.
As with the old reporting standard, the information to be collected includes the facility identifier, the industry code, the number of policies and claims and gross payments made, amongst other details.
The reporting standard formalises the decision that data be lodged with APRA’s agent. Amendments have also been made to the technical data specifications attached to the standard.
A Regulation Impact Statement is not required for this reporting standard as the changes are of a minor or machinery nature.
Financial Sector (Collection of Data) Determination No. 33 of 2005 - Reporting Standard LOLRS 800.1 (2005): Policy Data: Public and Product Liability and Professional Indemnity Insurance
This reporting standard requires Lloyd’s to report on public liability, product liability or professional indemnity insurance policies written by Lloyd’s underwriters that are in force during a reporting period.
As with the old reporting standard, the information to be collected includes the class of business covered by the policy, the policy basis, its current status, the premium earned from the policy and details about the insured party, amongst other details.
The reporting periods are 6 month periods. The reporting standard formalises the decision that data be lodged with APRA’s agent.
A Regulation Impact Statement is not required for this reporting standard as the changes are of a minor or machinery nature.
Financial Sector (Collection of Data) Determination No. 34 of 2005 - Reporting Standard LOLRS 800.2 (2005): Claim Data: Public and Product Liability and Professional Indemnity Insurance
This reporting standard requires Lloyd’s to report on claims made on (or not settled by) Lloyd’s underwriters during a reporting period, being claims that relate to public liability, product liability or professional indemnity insurance. The reporting periods are 6 month periods.
As with the old reporting standard, the information to be collected includes the class of business covered by the policy, the policy basis, its current status, the dates of loss and report, the jurisdiction of the claim, the nature of the loss and details of the likely case estimate, amongst other information.
The reporting standard formalises the decision that data be lodged with APRA’s agent.
A Regulation Impact Statement is not required for this reporting standard as the changes are of a minor or machinery nature.
Financial Sector (Collection of Data) Determination No. 35 of 2005 - Reporting Standard LOLRS 800.3 (2005): Facility Business Data: Public and Product Liability and Professional Indemnity Insurance
This reporting standard requires Lloyd’s to report on public liability, product liability or professional indemnity insurance facility business written by Lloyd’s underwriters, being facility business in relation to which an insurer is on risk during a reporting period.
As with the old reporting standard, the information to be collected includes the facility identifier, the industry code, the number of policies and claims and gross payments made, amongst other details.
The reporting periods are 6 month periods. The reporting standard formalises the decision that data be lodged with APRA’s agent.
A Regulation Impact Statement is not required for this reporting standard as the changes are of a minor or machinery nature.
Financial Sector (Collection of Data) Determination No. 36 of 2005
This revokes the old NCPD reporting standards. However, it is not intended to disturb any accrued obligations under an old NCPD reporting standard. If a reporting period for an insurer or Lloyd’s under one of the old standards ended before 30 June 2005, the entity will still be required to report under that old standard to the extent that it has not fulfilled an outstanding obligation under it. The new standards will apply in respect of reporting periods ending on or after 30 June 2005.
Consultation
Consultation on the original reporting standards
As noted above, the new reporting standards largely reflect the old ones which they replace. Accordingly it is relevant to describe the consultation that took place in relation to the old reporting standards.
Consultation on the original reporting requirements commenced in July 2003, with a preliminary letter sent to all regulated general insurers and Lloyd’s regardless of whether they currently write public liability or professional indemnity insurance. This letter invited the industry to indicate, through a questionnaire, the specific claims and policy information which would be of the most value to them when published. It also provided an opportunity for insurers to advise APRA about their current and intended participation in these sectors. A significant majority (85%) of all insurers returned completed questionnaires to APRA in response to this letter.
During the development of the original data specifications two rounds of consultation, including a round of pilot testing, was undertaken to ensure the completeness of the consultation process. The first round of consultation requested input on the data items to be collected, the time-frame for implementation, the frequency of on-going collections and the content of the reports to be provided from the data collection. The second round of consultation requested final comment on the proposed data specification for the collection. The pilot test provided general insurers with the opportunity to gain a clear understanding of the new data to be provided to APRA, and should avoid unnecessary clarification checks once the collection has commenced.
The general insurance industry indicated strong support for the proposed data collection. Concerns in respect of cost and data quality for data in respect of 1 January 2003 to 30 June 2004 were expressed and APRA accordingly proposes to require general insurers to provide information in respect of that period that is able to be readily extracted from their data systems. Going forward, general insurers would be required to provide the proposed data requirements in their entirety.
The consultation process, however, revealed that the generic reporting requirements applicable to general insurers were not appropriate for Lloyd’s. Lloyd’s operates a global centralised data collection system, which collates data received from individual underwriters. Each of these underwriters maintains their own data system that feeds into the centralised system. Lloyd’s underwriters in Australia, therefore, provide information to London, which then sends back standardised reports to the Australian operations.
During the consultation process, Lloyd’s advised that compliance with the data specifications applicable to other general insurers would have significant costs impacts on their operations. This is because the global data collection system would have to be altered to meet the requirements of APRA’s proposed data collection. Lloyd’s calculated that changing this system would incur significant costs, such that it would be more cost effective for them to pull their operations out of Australia rather than comply with the reporting requirements.
APRA, therefore, decided that to allow Lloyd’s to comply with slightly modified reporting requirements. As a result, three separate reporting standards are required to give effect to the data specifications applicable only to Lloyd’s Australia Limited.
Consultation on the changes to the data specifications reflected in the new reporting standards
The changes to the data specifications are generally of a technical nature and were agreed between APRA and a user group comprising (and representing) NCPD contributors. The changes were subsequently distributed to all NCPD contributories in May 2005. No objections have been made in relation to those changes. The changes formalising the obligation to submit data to APRA’s agent, rather than directly to APRA, reflect a decision made some months ago and advised to general insurers and Lloyd’s. There has been no objection to this.