Appendix A - Definitions

Term AASB 1023 (paragraph 19.1) definition
Financial Risk  The risk of a possible future change in one or more of a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, a credit rating or credit index or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract.
General insurance contract An insurance contract that is not a life insurance contract.
Insurance contract A contract under which one party (the insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder.
Insurance risk A risk, other than financial risk, transferred from the holder of a contract to the issuer.
Insured event An uncertain future event covered by an insurance contract which creates insurance risk.
Insurer The party that has an obligation under an insurance contract to compensate a policyholder if an insured event occurs.
Life insurance contract An insurance contract, or a financial instrument with a discretionary participation feature, regulated under the Life Insurance Act 1995, and similar contracts issued by entities operating outside Australia.
Policyholder A party that has a right to compensation under an insurance contract if an insured event occurs.
Weather derivative A contract that requires payment based on climatic, geological or other physical variables.


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