Label: |
Premiums Liabilities - Risk Margin |
Concept Guidance: |
This is the value, as at the relevant date, of the risk margin component of premiums liabilities, as determined in accordance with relevant prudential standards. The risk margin must be assessed at the level specified by APRA for capital purposes; this may not be the same risk margin used for other purposes such as statutory accounts.Premiums liabilities relate to all future claim payments arising from future events post the valuation date that will be insured under the reporting entity's existing policies that have not yet expired. The value of the premiums liabilities must include an amount in respect of the expenses that the reporting entity expects to incur in administering and settling the relevant claims and allow for expected premium refunds.The value of premiums liabilities must not include any Government charges directly imposed on the insurer such as levies, duties and taxes. Also a deferred acquisition cost asset must not be reported.The risk margin is the component of the value of premiums liabilities that relates to the inherent uncertainty that outcomes will differ from the central estimate.The risk margin relates to the central estimate measured as the present value of the future expected payments, i.e. discounted for future investment income, determined in accordance with relevant prudential standards. The central estimate is intended to reflect the mean value in the range of possible values for the outcome (that is, the mean of the distribution of probabilistic outcomes), and the risk margin, when added to the central estimate, is intended to increase the likelihood that the premiums liabilities will be sufficient to the level required in relevant prudential standards.
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