GIM2010 - Accounting framework: background

Insurance companies formed under UK law (i.e. under the Companies Acts, the Industrial and Provident Societies Act or other Act of Parliament) are required to draw up accounts in accordance with the Companies Act 1985. Except in the case of an industrial and provident society, such accounts must be submitted to the Registrar of Companies and are open to public inspection. See GIM10010 for the Companies Act requirements imposed on non-UK companies.

The starting point for the tax computations of a general insurance business, as for a non- insurance business, is the profit or loss disclosed by the set of accounts which the company must submit with its company tax return. These accounts must be drawn up in accordance with UK generally accepted accounting practice (GAAP).

This chapter explains the current framework of accounting standards applicable to the financial statements of general insurers, and the general principles, accounting methods and particular features of the accounts of general insurance companies.