GIM6010 - Technical provisions: background

The technical provisions of a general insurer comprise the various provisions and reserves which are shown both in the accounts and in the regulatory return.

Apart from the value of investments, the technical provisions are likely to be the biggest amount in the balance sheet. The term “technical provisions” is an all-embracing term used in the Insurance Accounts Directive (IAD) ( GIM2020) to cover true provisions, reserves, and deferrals of income. In this manual the words “provision” and “reserve” can be regarded as interchangeable.

GIM6020 to GIM6070 deal with the tax treatment of the ‘unearned premium provision’ (UPP) and the ‘unexpired risks provision’ (URP).

GIM6080 to GIM6140 deal with the tax treatment of technical provisions before the introduction of FA00/S107.

GIM6150 onwards deal with the tax treatment of technical provisions following the introduction of FA00/S107.

See GIM7000+ for the tax treatment of equalisation reserves.