GIM6260 - Technical provisions: periods of account beginning on or after 1 January 2000: General Insurance Reserves (Tax) Regulations: margin for error

Regulation 3: Rule 6: 5% margin for error

Rule 6 requires the insurer to find the difference between the original provisions and the recalculated provisions for the same earlier period of account.

The difference is compared to a margin for error of 5% of the recalculated provisions.

For example, if the figure of original provisions for the 2000 period of account was £100, and the discounted cost of settling them as at 31 December 2000 – the “recalculated provisions” – was £80, the difference between them is £20. This is compared to 5% of the recalculated provisions of £80, i.e. £4.