20 Definitions
20.1
In this Standard:
20.1[1]
acquisition costs means the fixed and variable costs of acquiring new business, including commissions and similar distribution costs, and costs of accepting, issuing and initially recording policies
(Acquisition costs relate to the costs incurred in acquiring specific life insurance contracts during the reporting period. They do not include the general growth and development costs incurred by a life insurer.)
20.1[2]
cedant means the policyholder under a life reinsurance contract
20.1[4]
direct insurance contract means an insurance contract that is not a reinsurance contract
20.1[5]
discretionary participation feature means a contractual right to receive, as a supplement to guaranteed benefits, additional benefits:
(a) that are likely to be a significant portion of the total contractual benefits;
(b) whose amount or timing is contractually at the discretion of the issuer; and
(c) that are contractually based on:
(i) the performance of a specified pool of contracts or a specified type of contract;
(ii) realised and/or unrealised investment returns on a specified pool of assets held by the issuer; or
(iii) the profit or loss of the company, fund or other entity that issues the contract
20.1[6]
fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. (See AASB 13.)
20.1[7]
financial risk means the risk of a possible future change in one or more of a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, a credit rating or credit index or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract
20.1[8]
general insurance contract means an insurance contract that is not a life insurance contract
20.1[9]
guaranteed benefits means payments or other benefits to which a particular policyholder or investor has an unconditional right that is not subject to the contractual discretion of the issuer
20.1[10]
guaranteed element means an obligation to pay guaranteed benefits included in a contract that contains a discretionary participation feature
20.1[11]
insurance asset means an insurer’s net contractual rights under an insurance contract
20.1[12]
insurance contract means a contract under which one party (the insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder
(Refer to Appendix for additional guidance in applying this definition.)
20.1[13]
insurance liability means an insurer’s net contractual obligations under an insurance contract
20.1[14]
insurance risk means risk, other than financial risk, transferred from the holder of a contract to the issuer
20.1[15]
insured event means an uncertain future event covered by an insurance contract and creates insurance risk
20.1[16]
insurer means the party that has an obligation under an insurance contract to compensate a policyholder if an insured event occurs
20.1[17]
investment-linked means where the benefit amount under a life insurance contract or life investment contract is directly linked to the market value of the investments held in the particular investment-linked fund
20.1[18]
liability adequacy test means an assessment of whether the carrying amount of an insurance liability needs to be increased (or the carrying amount of the related deferred acquisition costs or related intangible assets decreased) based on a review of future cash flows
20.1[19]
life insurance business means all life insurance contract and life investment contract business conducted by a life insurer
20.1[20]
life insurance contract means an insurance contract, or a financial instrument with a discretionary participation feature, regulated under the Life Insurance Act, and similar contracts issued by entities operating outside Australia
(Private health insurance contracts issued under the National Health Act 1953 but written by friendly societies registered under the Life Insurance Act, are not life insurance contracts but are general insurance contracts.)
20.1[21]
life insurance liability means a life insurer’s net contractual obligations under a life insurance contract
20.1[22]
life insurer means an entity registered under the Life Insurance Act 1995, that issues life insurance contracts or life investment contracts, and similar entities operating outside Australia
20.1[23]
life investment contract means a contract which is regulated under the Life Insurance Act 1995 but which does not meet the definition of a life insurance contract in this Standard, and similar contracts issued by entities operating outside Australia
20.1[24]
life investment contract liability means a life insurer’s net contractual obligations under a life investment contract which arise under the financial instrument component of a life investment contract
20.1[25]
life reinsurance contract means a life insurance contract issued by one insurer (the reinsurer) to compensate another insurer (the cedant) for losses on one or more contracts issued by the cedant
20.1[26]
non-investment-linked business means life insurance business other than investment-linked business
20.1[27]
policyholder means a party that has a right to compensation under an insurance contract if an insured event occurs
20.1[28]
policy liability means a liability that arises under a life insurance contract or a life investment contract including any asset or liability arising in respect of the management services element of a life investment contract
20.1[29]
reinsurance assets means a cedant’s net contractual rights under a reinsurance contract
20.1[30]
reinsurance contract means an insurance contract issued by one insurer (the reinsurer) to compensate another insurer (the cedant) for losses on one or more contracts issued by the cedant
20.1[31]
reinsurer means the party that has an obligation under a reinsurance contract to compensate a cedant if an insured event occurs
20.1[32]
separate financial statements are those presented by a parent, an investor in an associate or a venturer in a joint venture, in which the investments are accounted for on the basis of the direct equity interest rather than on the basis of the reported results and net assets of the investees
20.1[33]
statutory fund means a statutory fund under the Life Insurance Act 1995
20.1[34]
unbundle means to account for the components of a contract as if they were separate contracts