Territory Stories

Annual report 2009, Territory Insurance Office

Details:

Title

Annual report 2009, Territory Insurance Office

Collection

Territory Insurance Office reports; Reports; PublicationNT

Date

2009

Description

Made available via the Publications (Legal Deposit) Act 2004 (NT).

Notes

Date:2009-09

Language

English

Subject

Territory Insurance Office (N.T.); Territory Insurance Office (N.T.) -- Periodicals; Insurance, Accident -- Northern Territory; Insurance, Automobile -- Northern Territory; Insurance, No-fault Automobile -- Northern Territory

Publisher name

Territory Insurance Office

Place of publication

Darwin

Copyright owner

Check within Publication or with content Publisher.

Parent handle

https://hdl.handle.net/10070/247631

Citation address

https://hdl.handle.net/10070/575386

Page content

Territory Insurance Office Notes to the Financial Statements 30 June 2009 TIO Annual Report 2008/2009 32 d) Outstanding claims liability The liability for outstanding claims is measured as the central estimate of the present value of expected future payments against claims incurred at the reporting date under insurance contracts issued by TIO, with an additional risk margin to allow for the inherent uncertainty in the central estimate. Claims expense and a provision for outstanding claims are recognised in respect of direct insurance and inwards reinsurance business and the Motor Accidents Compensation Scheme. The provision covers claims reported but not yet paid, incurred but not reported claims ("IBNR") and the anticipated direct and indirect costs of settling those claims. Claims outstanding are assessed by review of individual claim files and estimating changes in the ultimate cost of settling claims, IBNRs and settlement costs using statistics based on past experience and trends. Outstanding claims are subject to independent actuarial assessment. The provision for outstanding claims is measured as the present value of expected future payments. These payments are estimated on the basis of the ultimate cost of settling claims, which is affected by factors arising during the period to settlement such as normal and "superimposed" inflation. The expected future payments are discounted to present value at the balance sheet date using a risk free rate. The details of rates applied are included in note 3. e) Receivables Receivables comprise premium receivables, interest receivables, other debtors and reinsurance and other recoveries. These amounts are initially recognised at fair value. Premium receivables and reinsurance and other recoveries, which include amounts due from policy holders, reinsurers and intermediaries, are subsequently measured at fair value through profit and loss. Interest receivables and other debtors are subsequently measured at amortised cost using the effective interest rate method. An allowance for impairment of receivables is established when there is objective evidence that TIO will not be able to collect all moneys due. The amount of the allowance is equal to the difference between the carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The impairment charge is recognised in the income statement. f) Deferred acquisition costs Acquisition costs are costs associated with obtaining and recording general insurance contracts. These costs include commissions and brokerage paid, advertising, underwriting and other selling costs, premium collection costs and other administrative costs. Acquisition costs incurred in obtaining general insurance contracts are deferred and recognised as assets where they can be reliably measured and where it is probable that they will give rise to premium revenue that will be recognised in the income statement in subsequent reporting periods. Deferred acquisition costs are amortised in accordance with the expected pattern of the incidence of risk under the general insurance contracts to which they relate.


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