Appendix A -- Defined terms
This appendix is an integral part of the Standard.
cedant
A[1]
The policyholder under a reinsurance contract.
deposit component
A[2]
A contractual component that is not accounted for as a derivative under AASB 9 and would be within the scope of AASB 9 if it were a separate instrument.
direct insurance contract
A[3]
An insurance contract that is not a reinsurance contract.
discretionary participation feature
A[4]
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.
fair value
A[5]
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.)
financial guarantee contract
A[6]
A contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.
financial risk
A[7]
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, 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.
guaranteed benefits
A[8]
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.
guaranteed element
A[9]
An obligation to pay guaranteed benefits, included in a contract that contains a discretionary participation feature.
insurance asset
A[10]
An insurer’s net contractual rights under an insurance contract.
insurance contract
A[11]
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. (See Appendix B for guidance on this definition.)
insurance liability
A[12]
An insurer’s net contractual obligations under an insurance contract.
insurance risk
A[13]
Risk, other than financial risk, transferred from the holder of a contract to the issuer.
insured event
A[14]
An uncertain future event that is covered by an insurance contract and creates insurance risk.
insurer
A[15]
The party that has an obligation under an insurance contract to compensate a policyholder if an insured event occurs.
liability adequacy test
A[16]
An assessment of whether the carrying amount of an insurance liability needs to be increased (or the carrying amount of related deferred acquisition costs or related intangible assets decreased), based on a review of future cash flows.
policyholder
A[17]
A party that has a right to compensation under an insurance contract if an insured event occurs.
reinsurance assets
A[18]
A cedant’s net contractual rights under a reinsurance contract.
reinsurance contract
A[19]
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.
reinsurer
A[20]
The party that has an obligation under a reinsurance contract to compensate a cedant if an insured event occurs.
unbundle
A[21]
Account for the components of a contract as if they were separate contracts.
Additional Australian defined terms – see Appendix C.