LLM3010 - Reinsurance to close (RITC) and technical provisions: section 107 FA2000: application to Lloyd바카라 사이트™s members: general
The legislation at FA00/S107 aimed to compensate the Exchequer for over-reserving for future liabilities by general insurers, and to impose discounting. The rules operated by using hindsight to compare, in a later year, the original technical provisions for a period of account with the present-day cost of settlement, that is, the claims paid and the revised provision for that period. Where the original provision was excessive (that is, exceeded the cost of settlement), an amount based on interest on the difference was added to the profits of the general insurer. Where the original provision was insufficient, a deduction from profits was made.
Primary legislation: section 107 FA 2000
FA00/S107 applied to the 바카라 사이트˜technical provisions바카라 사이트™ of a 바카라 사이트˜general insurer바카라 사이트™. 바카라 사이트˜General insurer바카라 사이트™ includes an underwriting member of Lloyd바카라 사이트™s - FA00/S107 (7)(d).
FA00/S107 (7) also contained definitions which are relevant to the application of the legislation to Lloyd바카라 사이트™s members. These are 바카라 사이트˜closing year바카라 사이트™, 바카라 사이트˜reinsurance to close바카라 사이트™, 바카라 사이트˜syndicate바카라 사이트™, 바카라 사이트˜underwriting year바카라 사이트™ and 바카라 사이트˜open syndicate바카라 사이트™. These largely follow the definitions in FA93/S184 and FA94/S230 (see LLM1010). 바카라 사이트˜Technical provisions바카라 사이트™ in relation to a Lloyd바카라 사이트™s member means the RITC premium or provision for unpaid liabilities of an open syndicate (usually referred to as the estimate of future liabilities - EFL).
FA00/S107 (8) to (10) contained special rules adapting the application of the legislation to Lloyd바카라 사이트™s underwriters
- FA00/S107 (8) allowed regulations to be made for Lloyd바카라 사이트™s
- FA00/S107 (9) and (10) ensured that the legislation applies at member level, not at syndicate level
- FA00/S107 (11) and (12)(c) repealed the previous legislation at FA93/S177 and FA94/S224 (see LLM3210), in relation to profits declared after 1 January 2000.
The General Insurance Reserves (Tax) Regulations 2001
Regulation 7 of SI2001/1757 (바카라 사이트˜GI reserves tax Regulations바카라 사이트™) contains the adaptations for Lloyd바카라 사이트™s members. The calculations required under the Regulations are made in the same way as for other general insurers. However, the membership of a syndicate, and each member바카라 사이트™s share of the capacity of a syndicate, may change from year to year. The meaning of 바카라 사이트˜technical provisions바카라 사이트™ and 바카라 사이트˜claims paid바카라 사이트™ are adapted so that they apply correctly in circumstances where there is no continuity of membership from the syndicate paying the RITC (the 바카라 사이트˜reinsured syndicate바카라 사이트™) to the syndicate receiving the RITC (the 바카라 사이트˜reinsurer syndicate바카라 사이트™).