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Note 8. Insurance underwriting expenses

Insurance and underwriting expenses
  2013 2012
Note 8A: Claims expense    
  $’000 $’000
Claims expense 26,634 22,051
Total claims expense 26,634 22,051
Note 8B: Insurance recoveries    
Reinsurance recoveries 1,619 1,178
Total insurance recoveries 1,619 1,178
Note 8C: Insurance premium revenue    
Premium revenue 35,474 31,796
Total insurance premium revenue 35,474 31,796
Note 8D: Reinsurance expense    
Reinsurance expense 6,526 6,455
Total reinsurance expense 6,526 6,455
Note 8E: Movement in unexpired risk liability    
Unexpired risk liability as at 1 July - 1,816
Recognition of additional unexpired risk liability - -
Release of unexpired risk liability - (1,816)
Unexpired risk liability as at 30 June - -
Deficiency recognised in the statement of comprehensive income    
Movement in unexpired risk liability - (1,816)
Total deficiency recognised in statement of comprehensive income - (1,816)
Calculation of deficiency    
Expected future claims per actuary report - 13,417
Less: recorded unearned premiums - (15,557)
Deficiency - (2,140)

No unexpired risk liability is necessary for 2013 as there is no deficiency.

Claims outstanding
  2013 2012
  $’000 $’000
Note 8F: Claims outstanding    
Gross claims outstanding 13,676 14,882
Less: reinsurers liability (2,706) (3,671)
Net claims outstanding 10,970 11,211

The Scheme has incurred claims during 2012–13 for which recoveries have and will be made in accordance with reinsurance treaties, which were in force at the date of loss. The effect of these treaties is taken into account in calculating the Provision for Outstanding Claims.

In determining the gross claims outstanding, the actuary has applied a prudential margin of 9% (2012: 9%), to a central estimate of the expected present value of future payments for claims incurred of $13,676,434 (2012: $14,882,078), resulting in a risk margin component of $1,129,247 (2012:$ 1,228,796).

Claims outstanding expected to be settled in more than 12 months
  2013 2012
Claims outstanding expected to be settled in 12 months 9,679 10,209
Claims outstanding expected to be settled in more than 12 months 1,291 1,002
Total claims outstanding 10,970 11,211
Note 8G: Unearned revenue    
Unearned premiums 19,391 16,634
Insurance agency revenue received in advance 172 188
Total unearned revenue 19,563 16,822

All unearned revenue is expected to be settled in no more than 12 months.

Note 8H: Net claims incurred

Net claims incurred
    2013     2012  
  Current          
  year Prior years Total Current year Prior years Total
  $’000 $’000 $’000 $’000 $’000 $’000
Gross incurred * 16,343 10,291 26,634 15,088 6,963 22,051
Less: Reinsurance and other recoveries (1,483) (136) (1,619) (38) (1,140) (1,178)
Net claims incurred 14,860 10,155 25,015 15,050 5,823 20,873

* Claims are not subject to discount

Building insurance claims are typically resolved within one year. No claims development table is required under AASB 1023 17.7.1 (b) (iii) for lines of business typically resolved within one year.

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