Financial Sector (Collection of Data) (reporting standard) determination No. 37 of 2013 - GRS 118.0_G - Operational Risk Charge (Level 2 Insurance Group)

Administered by Department of the Treasury

Legislation au F2013L00380 Not in force Legislative Instrument

Legislation content

Financial Sector (Collection of Data) (reporting standard) determination Nos. 27 to 41 of 2013

EXPLANATORY STATEMENT

Prepared by the Australian Prudential Regulation Authority (APRA)

Financial Sector (Collection of Data) Act 2001, subsections 13(1) and 15(1)
Acts Interpretation Act 1901, subsection 33(3)

Under paragraph 13(1)(a) of the Financial Sector (Collection of Data) Act 2001 (FSCODA), APRA has the power to determine reporting standards, in writing, with which financial sector entities must comply. Such standards relate to reporting financial or accounting data and other information regarding the business or activities of the entities.  Subsection 15(1) of FSCODA provides that APRA may declare a date on and after which reporting standards are to apply.

Subsection 33(3) of the Acts Interpretation Act 1901 provides that where an Act confers a power to issue an instrument the power shall, unless the contrary intention appears, be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to revoke and vary any such instrument.

 On 20 December 2012, APRA made the following determinations (the instruments):

  1. Financial Sector (Collection of Data) (reporting standard) determination No. 27 of 2013, which revokes Reporting Standard GRS 110.0_G (2011) Minimum Capital Requirement (Level 2 Insurance Group) made on 23 September 2011 and makes a new Reporting Standard GRS 110.1_G Prescribed Capital Amount (Level 2 Insurance Group);
  2. Financial Sector (Collection of Data) (reporting standard) determination No. 28 of 2013, which revokes Reporting Standard GRS 120.0_G (2011) Determination of Capital Base (Level 2 Insurance Group) made on 23 September 2011 and makes a new Reporting Standard GRS 112.0_G Determination of Capital Base (Level 2 Insurance Group);
  3. Financial Sector (Collection of Data) (reporting standard) determination No. 29 of 2013, which revokes Reporting Standard GRS 450.0_G (2009) Interest in Controlled Entities, Associates and Joint Ventures made on 21 August 2009 and makes a new Reporting Standard GRS 112.3_G Related Party Exposures (Level 2 Insurance Group);
  4. Financial Sector (Collection of Data) (reporting standard) determination No. 32 of 2013, which revokes Reporting Standard GRS 131.0_G (2009) Off Balance Sheet Exposure Risk Charge made on 21 August 2009 and makes a new Reporting Standard GRS 114.3_G Off-balance Sheet Business (Level 2 Insurance Group);
  5. Financial Sector (Collection of Data) (reporting standard) determination No. 33 of 2013, which revokes Reporting Standard GRS 210.0_G (2011) Outstanding Claims Liability – Insurance Risk Charge (Level 2 Insurance Group) made on 23 September 2011 and makes a new Reporting Standard GRS 115.0_G Outstanding Claims Liabilities – Insurance Risk Charge (Level 2 Insurance Group)
  6. Financial Sector (Collection of Data) (reporting standard) determination No. 34 of 2013, which revokes Reporting Standard GRS 210.1_G (2011) Premiums Liabilities – Insurance Risk Charge (Level 2 Insurance Group) made on 23 September 2011 and makes a new Reporting Standard GRS 115.1_G Premiums Liabilities – Insurance Risk Charge (Level 2 Insurance Group);
  7. Financial Sector (Collection of Data) (reporting standard) determination No. 36 of 2013, which revokes Reporting Standard GRS 150.0_G (2009) Asset Exposure Concentrations and Risk Charge made on 21 August 2009 and makes a new Reporting Standard GRS 117.0_G Asset Concentration Risk Charge (Level 2 Insurance Group);
  8. Financial Sector (Collection of Data) (reporting standard) determination No. 39 of 2013, which revokes Reporting Standard GRS 302.0_G (2011) Statement of Financial Position by Region (Level 2 Insurance Group) made on 23 September 2011 and makes a new Reporting Standard GRS 302.0_G Statement of Financial Position by Region (Level 2 Insurance Group);
  9. Financial Sector (Collection of Data) (reporting standard) determination No. 40 of 2013, which revokes Reporting Standard GRS 310.0_G (2011) Income Statement (Level 2 Insurance Group) made on 23 September 2011 and makes a new Reporting Standard GRS 310.0_G Income Statement (Level 2 Insurance Group); and
  10. Financial Sector (Collection of Data) (reporting standard) determination No. 41 of 2013, which revokes:
    1. Reporting Standard GRS 141.0_G (2009) Listed Equity Holdings and Risk Charge made on 21 August 2009; and
    2. Reporting Standard GRS 301.0_G (2011) Reinsurance Assets and Risk Charge (Level 2 Insurance Group) made on 23 September 2011.

The instruments commence on 1 January 2013. The instruments are being registered after this date; however the requirements apply to reporting periods ending no earlier than 28 February 2013. No parent entity of a Level 2 insurance group will be impacted by the retrospective registration as the time for lodging forms with APRA will arise no earlier than three months after 28 February 2013.

On 20 December 2012, APRA made the following determinations that were then varied and re-signed on 12 February 2013 (the instruments):

  1. Financial Sector (Collection of Data) (reporting standard) determination No. 30 of 2013, which makes Reporting Standard GRS 114.0_G Asset Risk Charge (Level 2 Insurance Group);
  2. Financial Sector (Collection of Data) (reporting standard) determination No. 31 of 2013, which makes Reporting Standard GRS 114.1_G Assets by Counterparty Grade (Level 2 Insurance Group);
  3. Financial Sector (Collection of Data) (reporting standard) determination No. 35 of 2013, which makes Reporting Standard GRS 116.0_G Insurance Concentration Risk Charge;
  4. Financial Sector (Collection of Data) (reporting standard) determination No. 37 of 2013, which makes Reporting Standard GRS 118.0_G Operational Risk Charge; and
  5. Financial Sector (Collection of Data) (reporting standard) determination No. 38 of 2013, which revokes Reporting Standard GRS 300.0_G (2011) Statement of Financial Position (Level 2 Insurance Group) made on 23 September 2011 and makes a new Reporting Standard GRS 300.0_G Statement of Financial Position (Level 2 Insurance Group).

The instruments commence on 12 February 2013. The instruments are being registered after this date; however the requirements apply to reporting periods ending no earlier than 28 February 2013. No parent entity of a Level 2 insurance group will be impacted by the retrospective re-signing and registration as the time for lodging forms with APRA will arise no earlier than three months after 28 February 2013.

  1.    Background

APRA commenced a review of the regulatory capital framework for general insurers (including Level 2 insurance groups) and life companies (LAGIC review) in 2010. The broad aims of the review were to:

  • improve the risk sensitivity and appropriateness of the capital standards in general insurance and life insurance (including friendly societies); and
  • where appropriate, improve the alignment of the capital standards across the industries that APRA supervises.

APRA has made a range of amendments to its prudential framework to give effect to the findings of the review.  As a result of the changes, there is a common capital framework for required capital and eligible capital across general insurers and life companies. The minimum capital requirement is known as the Prudential Capital Requirement (PCR). This comprises a prescribed capital amount plus any supervisory adjustment determined by APRA. General insurers and Level 2 insurance groups must at all times satisfy minimum requirements for the composition of their capital bases and ensure that the capital base exceeds the PCR.

2.      Purpose and operation of the instruments

The purpose of making the instruments is to introduce new and amended reporting standards and revoke existing reporting standards in relation to Level 2 insurance groups in order to implement the changes under the LAGIC review.

The implementation of the revised capital framework under LAGIC requires substantive changes to the reporting requirements for both general insurers and life companies. For general insurers and Level 2 insurance groups, amendments to the methodology for calculating the prescribed capital amount are made. This includes the introduction of an explicit operational risk charge, revisions to the calculation of the asset risk charge, insurance concentration risk charge and asset concentration risk charge. The definitions of capital base and the categories of capital included in the capital base are also revised.

APRA has also taken the opportunity to make improvements to the reporting requirements of general insurers, by implementing a number of changes to enhance the general insurance publications. The timing of submission of annual returns and a small number of technical changes to data submission were also made.

For Level 2 insurance groups, the changes to reporting requirements arising from the LAGIC review are effected through the instruments.

The new reporting standards and associated reporting forms are issued under FSCODA. These reporting standards enable the reporting requirements of the revised prudential framework in relation to Level 2 insurance groups to take effect. 

The collection of quarterly and annual data under the new general insurance prudential reporting requirements will commence for the first reporting period ending on or after 1 January 2013.

3.      Consultation

APRA undertook consultation on the LAGIC review between May 2010 and October 2012, including four rounds of industry consultation, three technical papers and two quantitative impact studies.

In addition to extensive consultation in relation to the prudential requirements, APRA released the following consultation materials in relation to the reporting requirements:

  • June 2012 – Discussion paper ‘Review of capital standards for general insurers and life insurers – proposed revisions to reporting requirements’[1], draft versions of reporting forms and instructions, reporting standards and capital adequacy calculation workbooks and instructions;
  • August 2012 – Letter to insurers ‘Additional proposed changes to the reporting standards’[2]; and
  • October 2012 – Response paper ‘Review of capital standards for general insurers and life insurers – reporting requirements’[3], final versions of all forms and instructions and reporting standards.

APRA has considered both formal and informal feedback from industry throughout the above multi-year process. Submissions received by APRA were broadly supportive of the changes. Issues considered to be significant or to have merit were incorporated into the revised capital framework.

4.      Regulation Impact Statement

A Regulation Impact Statement has been prepared and has been lodged as supporting material.

5.      Statement of compatibility prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

The legislative instruments the subject of this explanatory statement do not engage any of the applicable rights or freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. Accordingly, in APRA’s assessment, these legislative instruments are compatible with human rights.

 

 

[1]  http://www.apra.gov.au/CrossIndustry/Consultations/Pages/LAGIC-Reporting-Requirements-June-2012.aspx

[2]  http://www.apra.gov.au/CrossIndustry/Consultations/Documents/120806-letter-to-industry-LAGIC-proposed-changes-to-reporting-standards.pdf

[3]  http://www.apra.gov.au/lifs/ReportingFramework/Pages/LAGIC-final-reporting-requirements-LI-October-2012.aspx

Overview

The Financial Sector (Collection of Data) (Reporting Standard) Determination Nos. 27 to 41 of 2013 were made by the Australian Prudential Regulation Authority (APRA) to implement the findings of the Life and General Insurance Capital (LAGIC) review, which sought to improve the risk sensitivity and appropriateness of capital standards for general insurers and life companies, as well as improve alignment across industries supervised by APRA. Enacted under the Financial Sector (Collection of Data) Act 2001, these instruments introduce new reporting standards, amend existing ones, and revoke outdated standards to reflect the revised capital framework. The purpose of these determinations is to ensure that Level 2 insurance groups comply with the new requirements arising from the LAGIC review, including changes to the calculation of prescribed capital amounts, the introduction of an operational risk charge, and revisions to capital base definitions. APRA consulted extensively with the industry over a multi-year process, and the feedback received was generally supportive of the changes, with significant issues incorporated into the revised capital framework. The instruments were developed following a comprehensive review and consultation process, ensuring that the new reporting standards are well-aligned with the updated prudential requirements. The new reporting standards and associated forms are issued under the Financial Sector (Collection of Data) Act 2001, enabling the revised prudential framework’s reporting requirements to take effect. These legislative instruments are compatible with human rights as they do not engage any of the applicable rights or freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Scope and Application

The Financial Sector (Collection of Data) (reporting standard) determination Nos. 27 to 41 of 2013, issued by the Australian Prudential Regulation Authority (APRA) under the Financial Sector (Collection of Data) Act 2001, pertain to Level 2 insurance groups, which include general insurers and life companies. These determinations aim to implement changes to the reporting standards following the Life and General Insurance Capital (LAGIC) review, which sought to improve the risk sensitivity and appropriateness of capital standards in the insurance sector. The instruments introduce new and amended reporting standards, replacing existing ones to align with the revised prudential framework. The reporting standards cover various aspects such as prescribed capital amounts, operational risk charges, and capital base definitions, among others. These new standards are designed to enhance the quality and relevance of financial and accounting data collected from these entities. The determinations apply to reporting periods ending on or after 28 February 2013, although they were issued in 2012 and 2013. The geographic and jurisdictional reach of these determinations is limited to the financial sector within Australia, specifically targeting entities under APRA's supervision. The instruments do not explicitly state any exclusions or exemptions; however, the changes are primarily focused on Level 2 insurance groups, implying that other entities not falling under this category may not be directly impacted. The authority to extend or restrict application through subordinate instruments is implicitly supported by the provisions of the Acts Interpretation Act 1901.

Key Provisions

The Financial Sector (Collection of Data) (reporting standard) determination Nos. 27 to 41 of 2013, made by the Australian Prudential Regulation Authority (APRA) under the Financial Sector (Collection of Data) Act 2001, establish new and amended reporting standards for Level 2 insurance groups. These instruments revoke existing reporting standards and introduce new ones in order to implement the changes arising from the Life and General Insurance Capital (LAGIC) review (sections 27 to 41). The new standards address various aspects of financial reporting, such as capital requirements, asset risk charges, and operational risk charges, among others. These changes are designed to enhance the risk sensitivity and appropriateness of capital standards in the insurance industry and to align capital standards across the industries supervised by APRA. Entities governed by these determinations are required to comply with the new reporting standards that reflect the revised prudential framework. This includes submitting data on prescribed capital amounts, capital base composition, asset risk charges, operational risk charges, and other related financial information as specified in the new standards (sections 27 to 41). The new standards also encompass changes to the definitions of capital base and categories of capital included in the capital base. For Level 2 insurance groups, adherence to these reporting standards is essential for ensuring that their capital bases meet the minimum requirements set by APRA. Failure to comply with the reporting standards established by these determinations may result in regulatory action by APRA. Although the explanatory statement does not explicitly mention offences, penalties, or civil/criminal consequences for breach, non-compliance with APRA's reporting requirements generally can lead to enforcement actions, which may include fines, public reprimands, or other sanctions. The severity of these consequences would depend on the nature and extent of the non-compliance, as well as any associated regulatory breaches or failures to meet prudential standards. It is important for entities to ensure timely and accurate submission of the required data to avoid potential repercussions.

Legal classification tags

Area of Law
Financial Law
Instrument
Regulation
Concepts
Definitions & Interpretation
Reporting & Disclosure Obligations
Regulatory Standards

Interactions

Authorises

All Versions

Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.