Appendix A (AASB17_07-17_COMPdec22_01-23)

A component of the carrying amount of the asset or liability for a group of insurance contracts representing the unearned profit the entity will recognise as it provides insurance contract services under the insurance contracts in the group.

The period during which the entity provides insurance contract services. This period includes the insurance contract services that relate to all premiums within the boundary of the insurance contract.

A difference between:

(a)            for premium receipts (and any related cash flows such as insurance acquisition cash flows and insurance premium taxes) – the estimate at the beginning of the period of the amounts expected in the period and the actual cash flows in the period; or

(b)            for insurance service expenses (excluding insurance acquisition expenses) – the estimate at the beginning of the period of the amounts expected to be incurred in the period and the actual amounts incurred in the period.

The risk of a possible future change in one or more of a specified interest rate, financial instrument price, commodity price, currency exchange rate, index of prices or rates, 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.

An explicit, unbiased and probability-weighted estimate (ie expected value) of the present value of the future cash outflows minus the present value of the future cash inflows that will arise as the entity fulfils insurance contracts, including a risk adjustment for non-financial risk.

A set of insurance contracts resulting from the division of a portfolio of insurance contracts into, at a minimum, contracts issued within a period of no longer than one year and that, at initial recognition:

(a)            are onerous, if any;

(b)            have no significant possibility of becoming onerous subsequently, if any; or

(c)            do not fall into either (a) or (b), if any.

Cash flows arising from the costs of selling, underwriting and starting a group of insurance contracts (issued or expected to be issued) that are directly attributable to the portfolio of insurance contracts to which the group belongs. Such cash flows include cash flows that are not directly attributable to individual contracts or groups of insurance contracts within the portfolio.

A contract under which one party (the issuer) 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.

The following services that an entity provides to a policyholder of an insurance contract:

(a)            coverage for an insured event (insurance coverage);

(b)            for insurance contracts without direct participation features, the generation of an investment return for the policyholder, if applicable (investment-return service); and

(c)            for insurance contracts with direct participation features, the management of underlying items on behalf of the policyholder (investment-related service).

An insurance contract for which, at inception:

(a)            the contractual terms specify that the policyholder participates in a share of a clearly identified pool of underlying items;

(b)            the entity expects to pay to the policyholder an amount equal to a substantial share of the fair value returns on the underlying items; and

(c)            the entity expects a substantial proportion of any change in the amounts to be paid to the policyholder to vary with the change in fair value of the underlying items.

An insurance contract that is not an insurance contract with direct participation features.

Risk, other than financial risk, transferred from the holder of a contract to the issuer.

An uncertain future event covered by an insurance contract that creates insurance risk.

The amounts that an insurance contract requires the entity to repay to a policyholder in all circumstances, regardless of whether an insured event occurs.

A financial instrument that provides a particular investor with the contractual right to receive, as a supplement to an amount not subject to the discretion of the issuer, additional amounts:

(a)            that are expected to be a significant portion of the total contractual benefits;

(b)            the timing or amount of which are contractually at the discretion of the issuer; and

(c)            that are contractually based on:

(i)              the returns on 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 entity or fund that issues the contract.

An entity’s obligation to:

(a)            investigate and pay valid claims for insured events that have already occurred, including events that have occurred but for which claims have not been reported, and other incurred insurance expenses; and

(b)            pay amounts that are not included in (a) and that relate to:

(i)              insurance contract services that have already been provided; or

(ii)             any investment components or other amounts that are not related to the provision of insurance contract services and that are not in the liability for remaining coverage.

An entity’s obligation to:

(a)            investigate and pay valid claims under existing insurance contracts for insured events that have not yet occurred (ie the obligation that relates to the unexpired portion of the insurance coverage); and

(b)            pay amounts under existing insurance contracts that are not included in (a) and that relate to:

(i)              insurance contract services not yet provided (ie the obligations that relate to future provision of insurance contract services); or

(ii)             any investment components or other amounts that are not related to the provision of insurance contract services and that have not been transferred to the liability for incurred claims.

A party that has a right to compensation under an insurance contract if an insured event occurs.

Insurance contracts subject to similar risks and managed together.

An insurance contract issued by one entity (the reinsurer) to compensate another entity for claims arising from one or more insurance contracts issued by that other entity (underlying contracts).

The compensation an entity requires for bearing the uncertainty about the amount and timing of the cash flows that arises from non-financial risk as the entity fulfils insurance contracts.

Items that determine some of the amounts payable to a policyholder. Underlying items can comprise any items; for example, a reference portfolio of assets, the net assets of the entity, or a specified subset of the net assets of the entity.