GIM6210 - Technical provisions: periods of account beginning on or after 1 January 2000: General Insurance Reserves (Tax) Regulations: summary of regulation 3

Regulation 3 sets out rules for recalculating the “original provisions” for the earlier period of account.

Rule 1: Subject to regulation 5 ( GIM6350), all calculations are to be made in sterling.

Rule 2: Find the “original provisions for the earlier period of account”.

Rule 3: Find out the cost of settling liabilities to which the original provisions relate.

Rule 4: Applies where the insurer enters into a reinsurance contract or a novation .

Rule 5: Discount each liability and aggregate them to find the “recalculated provisions ”

Rule 6: Compare the difference between original and recalculated provisions and a “margin for error”.

Rule 7: Subject to the margin for error, the difference represents the “cumulative excess or deficiency”.

Rule 8: Compare the cumulative excess or deficiency with amounts found in “intervening periods”.

Rule 8A: Applies where an election has been made under section 107(4).

Rule 9: Calculate interest on the result of Rule 8 to find the excess or deficiency for the period in which the calculation is made.

Rule 10: UPP and URP are excluded from the rules.