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Note 3. Insurance underwriting activities

Defence Service Homes Insurance Scheme
Notes to and forming part of the Financial Statements

for the year ended 30 June 2017

This section describes DSHIS's insurance underwriting activities.

Note 3.1. Insurance underwriting activities

Note 3.1A: Reinsurance and other recoveries
  2017 2016
  $'000 $'000
Reinsurance recoveries 1,416 28
Other recoveries 351 181
Total reinsurance and other recoveries 1,767 209

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Note 3.1B: Claims outstanding
  2017 2016
  $'000 $'000
Gross claims outstanding 18,897 13,290
Less: reinsurers liability (2,050) (571)
Net claims outstanding 16,847 12,719

The Scheme has incurred claims during 2016–17 for which recoveries have and will be made in accordance with reinsurance treaties, which were in force at the date of loss.

In determining the gross claims outstanding, the actuary has applied a prudential margin of 11% (2016: 11%), to a central estimate of the expected present value of future payments for claims incurred of $18,896,640 (2016: $13,290,030), resulting in a risk margin component of $1,872,640 (2016: $1,317,030).

No unexpired risk liability is necessary for 2017 as there is no deficiency.

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Note 3.1C: Unearned revenue
  2017 2016
  $'000 $'000
Unearned premiums 21,770 21,558
Insurance agency revenue received in advance 69 61
Total unearned revenue 21,839 21,619

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Note 3.1D: Net claims incurred
  2017 2016
  Current year Prior years Total Current year Prior years Total
  $'000 $'000 $'000 $'000 $'000 $'000
Gross incurred* 30,080 3,919 33,999 20,053 4,867 24,920
Less: Reinsurance and other recoveries (1,630) (137) (1,767) (20) (189) (209)
Net claims incurred 28,450 3,782 32,232 20,033 4,678 24,711

*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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