09/10

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Circular No 09/10

Contact Officers:
Paul Collins (02) 6215 7955
email: paul.collins@phiac.gov.au

Replaces Circular: NA

15 July 2009

PDF Format:

Circ 09/10

2008–2009 END OF YEAR REPORTING REQUIREMENTS

This circular is to inform insurers of their reporting requirements to PHIAC for the year ended 30 June 2009. The circular contains:

  • Risk equalisation audit arrangements
  • PHIAC 2 annual reporting requirements
  • Schedule of critical dates for reporting
  • References to related documents available on PHIAC’s web site
    • Risk equalisation audit program
    • List of updates to the risk equalisation audit program
    • Guidance for Auditors for the PHIAC 2 Annual Return
 Insurers are reminded that PHIAC will name, in its annual report to Parliament, those insurers that do not meet the statutory reporting requirements. 
 

Audit Arrangements for Financial Year Ended 30 June 2009

Insurers must ensure that their external auditors adopt the audit program and guidance provided by PHIAC, or an alternative that provides similar checks and levels of accuracy, for the 2008–09 financial year. Insurers are responsible for engaging competent auditors. Insurers and auditors are responsible for their own audit program and processes.

Risk Equalisation 

PHIAC 1 returns (Risk Equalisation and related statistics) for the four quarters to 30 June 2009 are to be audited by external auditors. A copy of the audit program for PHIAC 1 returns submitted to PHIAC for the period 1 July 2008 to 30 June 2009 is available from the PHIAC website at http://www.phiac.gov.au/for-industry/regulatory-framework/audit-programs/ . The required format for the audit opinion is included in the PHIAC 1 audit program as Appendix D.
 
A list of updates to the audit program is also available as a separate document at http://www.phiac.gov.au/for-industry/regulatory-framework/audit-programs/ .
 
Audit certification for the four quarters to 30 June each year must be provided within three months of the end of the financial year or such time as approved by the Commissioner. Please ensure that the certificate for the 2008–2009 financial year reaches the PHIAC Secretariat by no later than 17:00 AEST, 30 September 2009.   

PHIAC 2 (Annual) Return

PHIAC 2 (Annual) Returns for the 12-month period ended 30 June 2009 are to be subject to external audit to ensure consistency with the insurer’s statutory financial accounts and faithful application of the solvency and capital adequacy standards.

The Market Yield and Investment Earnings rates prescribed by Clause 25 of Schedule 3 of the Private Health Insurance (Health Benefits Fund Administration) Rules 2007 to be applied by all health benefits funds for the PHIAC (Annual) Return is to be consistent with the rate advised by PHIAC for the June 2009 quarterly returns in the relevant circular. PHIAC circulars are available at: http://www.phiac.gov.au/circulars/.

To assist auditors in their review of these returns, audit guidance for auditors has been prepared.  A copy of the audit program for the PHIAC 2 (Annual) Return is available from the PHIAC website at http://www.phiac.gov.au/for-industry/regulatory-framework/audit-programs/. The Guidance includes a proforma opinion for auditors.

Audit certification for the PHIAC 2 (Annual) Return must be provided within three months of the end of the financial year or such time as approved by the Commissioner. Please ensure that a hardcopy of the opinion reaches the PHIAC Secretariat by no later than 17:00 AEST, 3 October 2009. Insurers must also ensure that each page of the hardcopy return is authenticated by inclusion of the auditor’s identifying stamp.

Schedule of Information to be Provided

Private health insurers must provide the following information to PHIAC:

1.    Audit Opinion

·         PHIAC 1 – no later than 30 September 2009

·         PHIAC 2 – no later than 3 October 2009

2.    PHIAC 2 (Annual) Return

·         A PHIAC 2 Return for the 12-month period ended 30 June 2009. The completed return must be provided in both hard and soft copies.

·         Softcopy of the PHIAC 2 (Annual) Return – no later than 30 September 2009. To be sent to returns@phiac.gov.au

·         Hardcopy of the PHIAC 2 (Annual) Return – no later than 3 October 2009.

3.    Statutory Financial Accounts

·         A copy of the signed statutory financial accounts of the health benefits fund[1].

·         Where not already included in the copy of the statutory financial accounts, a copy of the Audit Report in relation to the statutory financial accounts.

4.    Financial Condition Report

·         A copy of the Financial Condition Report prepared by the private health insurer’s Appointed Actuary in respect of the 2008–2009 financial year.

5.    Statement by Directors[2]

·         The accounts and statements given to the Council must be certified by two directors of the private health insurer to be true and correct and be in the form specified in the Private Health Insurance (Insurer Obligations) Rules 2007. The form specified in the Rules is included at Attachment 1.

 

[1] Where the health benefits fund is a part of an economic entity, a copy of the consolidated financial accounts for the 2008-2009 financial year.

[2] The form of the statements by Directors is at Attachment 1

SCHEDULE OF CRITICAL DATES FOR SUBMISSION OF DOCUMENTS 

Due date
Document
Comment
30 September 2009
PHIAC 1 audit certification for the four quarters to 30 June 2009
Insurers must apply in writing well before 30 September 2009 if extra time is required.
30 September 2009
Softcopy 2009 Annual Return
Must be received at PHIAC by no later than 17:00 [AEST].
3 October 2009
Hardcopy of 2009 Annual Return for 2009 Annual Return
Must be received at PHIAC by no later than 17:00 AEST.
3 October 2009
Auditor's Report
For the completed PHIAC 2 Return for the 12-month period ended 30 June 2009. Must be received at PHIAC by no later than 17:00 AEST.
3 October 2009
A copy of the statutory financial accounts of the health benefits fund
Must be received at PHIAC by no later than 17:00 AEST.
3 October 2009
A copy of the Audit Report in relation to the statutory financial accounts.
Where not already included in the copy of the statutory financial accounts. Must be received at PHIAC by no later than 17:00 AEST.
3 October 2009
A copy of the Financial Condition Report
Prepared by the private health insurer’s Appointed Actuary in respect of the 2008/2009 financial year. Must be received at PHIAC by no later than 17:00 AEST.
3 October 2009
Statement by Directors in Relation to Capital Adequacy Margin, Loss Ratio and Risk Management Procedures
Certified by two Officers
(See Attachment 1). Must be received at PHIAC by no later than 17:00 AEST.

Documents that are not in the appropriate form or are incomplete will not satisfy the lodgement requirements of this circular or, in some circumstances, those of the Private Health Insurance (Insurer Obligations) Rules 2007.

Insurers requiring additional time to meet any reporting requirements must apply in writing no less than 7 days before the relevant due date.
 

Requirement to Report Solvency & Capital Adequacy Position

Clause 5 of Schedule 2 of the Private Health Insurance (Health Benefits Fund Administration) Rules 2007 requires that the Solvency Reserve is disclosed in the financial statements of the insurer.