Circular No 05/06

Contact Officers:
Paul Groenewegen (02) 6215 7966
email: paul.groenewegen@phiac.gov.au

Replaces Circular: 123 & 04/11

31 May 2005

Schedule of Information to be Provided

Registered Health Benefits Organisations must provide the following information to PHIAC;

1.1

2005 Annual Return, Contributions and Benefits Detail and Schedules 1 through 11, hard and soft copies. Each page of the hardcopy return must be authenticated by inclusion of the auditor’s identifying stamp;

1.2

Public Officers Report covering the 2005 Annual Return and incorporating contact details for PHIAC enquiries.

1.3

Auditor's Report regarding the preparation of the PHIAC Annual Return incorporating the statement included in the Audit Guidance;

1.4

Statement by Directors in relation to the Capital Adequacy Margin and Loss Ratio.

1.5

Statement by Directors in relation to risk management procedures of the organisation.

• Should the Directors of an organisation determine that the statement in relation to risk management cannot be signed, the organisation should contact PHIAC at the earliest opportunity.

The form of the statement by directors is at Attachment 1.

1.6

A copy of the Audit Report in relation to the statutory financial accounts.

1.7

A copy of the Financial Condition Report prepared by the Appointed Actuary in respect of the 2004/2005 financial year;

1.8

A copy of any report to members regarding the organisation’s operations issued during the 2004/2005 financial year, not previously sent to PHIAC;

1.9

Where the health fund is a part of an economic entity, a copy of the consolidated financial accounts for the 2004/2005 financial year;

2.

Due Date for Submission of Annual Return

All documents must be received at PHIAC on or before Friday 30 September 2005.

3.

2005 Annual Return Template

PHIAC Annual Returns for the year ended 30 June 2005 are to be submitted using the 2005 Annual Return template. Copies of the 2005 Annual Return Template will be distributed to Public Officers and PHIAC 2 contact persons nominated in each organisation’s March 2005 PHIAC 2 return.

Requests for further copies of the 2005 Annual Return template should be directed to the contact officer.

4.

Audit Guidance

The Audit Guidance document will be distributed with the 2005 Annual Return Template and will be available via reference to this circular.

Requests for hardcopies of the audit guidance should be directed to the contact officer.

5.

PHIAC Reporting Requirements

PHIAC reporting requirements have been updated and re-issued with this circular.

6.

Market Yield Rate

The Market Yield and Investment Earnings rates prescribed by Division 2.8 of the Health Benefits Organizations - Interpretation Standard 2003 to be applied by all Registered Health Benefits Organisations for the PHIAC Annual Return is to be consistent with the rate advised by PHIAC for the June 2005 quarterly returns.

7.

Basis for Inclusion of Amounts at Contributions and Benefits Detail Schedule

The basis of the amounts to be included for each State in relation to the Contributions and Benefits Detail Schedule of the Annual Return is to be determined by state of residence of the contributor. i.e. consistency with the requirements for reporting certain contributors for the purposes of the PHIAC 1 (Reinsurance) Return (the 500 SEU rule) does not apply.

Revenue and benefit amounts are to be included consistent with the type of service provided (eg, hospital, ancillary). Revenue received and benefits paid in respect of ambulance only insurance cover is to be disclosed separately from other ancillary amounts.

8.

Report by Organisation

Organisations are not required to submit the ‘Report by Organisation’ that details the assumptions and procedures used in calculating the Solvency and Capital Adequacy Requirements as prescribed by the Standards unless;

• the assumptions made or procedures used are significantly different from those adopted in the preparation of the PHIAC 2 Return for the quarter ended 30 June 2005, or
• the organisation is requested to do so by PHIAC.

9.

Requirement to Report Solvency & Capital Adequacy Position

Paragraph 1.1.1(8) of the Health Benefits Organizations – Solvency Standard 2003 requires that the Solvency Requirement be disclosed in the financial statements of the Organisation.

The Capital Adequacy Requirement is not to be disclosed in the financial statements of the Organisation

10.

Statements by Directors in Relation to Capital Adequacy Margin and Loss Ratio& Capital Adequacy Position

Capital Adequacy Margin

• a statement signed by no less than two Directors of the organisation certifying that the Capital Adequacy Margin adopted by the organisation for the annual return is considered appropriate and has been endorsed by a resolution of the Board of the organisation must be prepared and submitted with the PHIAC Annual Return.
• PHIAC's suggested statement for this purpose is as follows;

"The Board of [Organisation], at a meeting held on [Date], after consideration of the qualitative factors specified by Division 2.7 (Capital Adequacy Margin) of the Health Benefits Organizations - Interpretation Standard 2003, resolved that the Capital Adequacy Margin of [x]% is an appropriate margin for risk for the purposes of the preparation of the PHIAC Annual Return for the [Organisation] for the year ended 30 June 2005."

Loss Ratio

• Where the Board of an organisation believes that the sum of the Claims Ratio and the Expense Ratio may no longer be a best estimate of the prospective loss ratio for the purpose of calculating the Unexpired Risk Liability in accordance with Division 2.11 Health Benefits Organizations – Interpretation Standard 2003, the Organisation must provide a statement certifying that the alternative loss ratio adopted by the organisation for the annual return is considered appropriate and has been endorsed by a resolution of the Board.
• PHIAC's suggested statement for this purpose is as follows;

"The Board of [Organisation], at a meeting held on [Date], after consideration of the qualitative factors specified by Division 2.11 (Contributions in Advance & Unexpired Risk Reserve) of the Health Benefits Organizations - Interpretation Standard 2003, resolved that the Loss Ratio of [x]% is a suitable alternative ratio for the purposes of the preparation of the PHIAC Annual Return for the [Organisation] for the year ended 30 June 2005."