CHAPTER 3
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SPECIALIST LIABILITY RULES
PART 3-35
-
INSURANCE BUSINESS
History
Part 3-35 heading amended by No 169 of 2001.
Part 3-35 inserted by No 89 of 2000.
Division 321
-
General insurance companies and companies that self-insure in respect of workers
'
compensation liabilities
History
Div 321 inserted by
No 79 of 2010
, s 3 and Sch 5 item 2, applicable to the first income year starting on or after 1 July 2010 and later income years.
Subdivision 321-B
-
Premium income of general insurance companies
History
Subdiv 321-B inserted by
No 79 of 2010
, s 3 and Sch 5 item 2, applicable to the first income year starting on or after 1 July 2010 and later income years.
SECTION 321-60
321-60
How value of unearned premium reserve is worked out
Work out the value, at the end of an income year, of a *general insurance company's unearned premium reserve in this way:
Method statement
Step 1.
Add up the gross premiums received or receivable by the company, in relation to *general insurance policies issued in the course of carrying on *insurance business, in that or an earlier income year.
Step 2.
Reduce the step 1 amount by so much of the costs incurred by the company in connection with the issue of those policies as relate to the gross premiums, including, for example, costs such as:
(a) commission and brokerage fees; and
(b) administration costs of processing insurance proposals and renewals; and
(c) administration costs of collecting premiums; and
(d) selling and underwriting costs; and
(e) fire brigade charges; and
(f) stamp duty; and
(g) other charges, levies and contributions imposed by governments or governmental authorities that directly relate to general insurance policies.
Step 3.
Reduce the step 2 amount by any premiums (the
relevant reinsurance premiums
) paid or payable by the company, in that or an earlier income year, for the reinsurance of risks covered by those policies, except:
(a) reinsurance premiums that the company cannot deduct because of subsection
148(1)
of the
Income Tax Assessment Act 1936
(about reinsurance with non-residents); and
(b) reinsurance premiums that were paid or payable in respect of a particular class of *insurance business where, under the contract of reinsurance, the reinsurer agreed to pay, in respect of a loss incurred by the company that is covered by the relevant policy, some or all of the excess over an agreed amount.
Step 4.
Add to the step 3 amount any reinsurance commissions received or receivable by the company that relate to the relevant reinsurance premiums.
Step 5.
The value, at the end of an income year, of the unearned premium reserve is so much of the step 4 amount as the company determines, based on proper and reasonable estimates, to relate the risks covered by the policies in respect of later income years.
History
S 321-60 inserted by
No 79 of 2010
, s 3 and Sch 5 item 2, applicable to the first income year starting on or after 1 July 2010 and later income years.