GIM4050 - Taxation of general insurance: overview of the accounts

The starting point for the Case 1 computation will be the profit or loss as disclosed in the Profit and Loss account. GIM2000+ explains the accounting treatment of general insurance. The accounts are divided into:

• ‘Technical Account’, which will reflect the underwriting profit derived from premium income and investment income and investment return reallocated from the non-technical account, less claims, operating expenses and changes in provisions
• ‘Non-technical account’ which will reflect the investment income and the investment return reallocated to the technical account, and other income and expenses.

For the most part, accounting for general insurance follows fairly orthodox and recognisable lines. For general insurers the accounts are drawn up in accordance with Schedule 9A of the Companies Act 1985 and the ABI guidelines on accounting for insurance business (the ABI SORP) (see GIM2040+).

For accounting periods beginning on or after 1 January 2004, accounts will be drawn up on the annual basis. For annual accounting see GIM2100.

For earlier periods, accounts may be drawn up either on the annual or funded basis, depending on the type of business written. For funded accounting see GIM2140.