GIM1070 - Legal basis of insurance: regulatory definition of “insurance business"
Under FSMA 2000 the Financial Services Authority (FSA) has
established a regulatory framework for insurance business. Under
the FSA’s Integrated Prudential Sourcebook (PRU) an insurer
must not carry out any commercial business other than
“insurance business” and activities directly arising
from that business (PRU 7.6.13). The FSA Handbook’s Glossary
defines an “insurance business” as “the business
of effecting or carrying out contracts of insurance“.
“Contracts of insurance” are in turn defined in
the FSMA 2000 (Regulated Activities) Order 2001 (SI2001/544) in
terms that derive from the European Insurance Directives (see
GIM2020 and
GIM3030).
There are some types of business which are on the fringes of
insurance (e.g. customs bonds) and some which are not insurance at
all (e.g. pension fund management). In practice, however, it will
seldom be relevant to the corporation tax liability of an insurance
company that some of its activities may not strictly be insurance,
at least where the company is regulated in a territory where
regulation is taken seriously.
