Legalize / United Kingdom / Statutory-Instrument

The Insurance Companies Regulations 1994

Type Statutory-Instrument

Publication 1994-06-07

State In force

Department Queen's Printer of Acts of Parliament

Source legislation.gov.uk

PDF Download

articles 7

Reform history JSON API

(2) The provision mentioned in paragraph (1) above shall have regard to, among other things, the company’s actual expenses in the last twelve months before the valuation date and to the effects of inflation on future expenses on prudent assumptions as to the future rates of increase in prices and earnings.

Options

72

(1) Provision shall be made on prudent assumptions to cover any increase in liabilities caused by policy holders exercising options under their contracts.

(2) Where a contract includes an option whereby the policy holder could secure a guaranteed cash payment within twelve months following the valuation date, the provision for that option shall be such as to ensure that the value placed on the contract is not less than the amount required to provide for the payments that would have to be made if the option were exercised.

Contracts not to be treated as assets

73

No contract for long term business shall be treated as an asset.

No credit for profits from voluntary discontinuance

74

Allowance shall not be made in the valuation for the voluntary discontinuance of any contract if the amount of the liability so determined would thereby be reduced.

Nature and term of assets

75

The determination of the amount of long term liabilities shall take into account the nature and term of the assets representing those liabilities and the value placed upon them and shall include prudent provision against the effects of possible future changes in the value of the assets on—

(a) the ability of the company to meet its obligations arising under contracts for long term business as they arise, and

(b) the adequacy of the assets to meet the liabilities as determined in accordance with regulations 65 to 74 above.

PART X — CREDIT INSURANCE BUSINESS

Credit insurance business: equalisation reserve

76

(1) Subject to regulation 77 below—

(a) every UK company which carries on credit insurance business; and

(b) every non-EC company which carries on credit insurance business in the United Kingdom,

shall maintain a reserve (in these Regulations referred to as an “equalisation reserve”) in respect of that business, determined (at the option of the company) in accordance with one of the four methods set out in Schedule 14.

(2) In applying section 32(5) of the Act[^f00038] the value of the company’s liabilities shall be treated as being increased by the amount of the equalisation reserve.

Exemption from regulation 76

77

(1) Regulation 76 shall not apply—

(a) in the case of a UK company, where the premiums or contributions receivable in any financial year in respect of its credit insurance business are less than 4 per cent. of the total premiums or contributions receivable by it in that financial year and less than 2,500,000 units of account; and

(b) in the case of a non-EC company, where the premiums or contributions receivable in any financial year in respect of its credit insurance business carried on through a branch in the United Kingdom are less than 4 per cent. of the total premiums or contributions receivable by it in that financial year in respect of business carried on through that branch and less than 2,500,000 units of account.

(2) For the purposes of paragraph (1) above “premiums or contributions receivable” in any financial year in respect of any business means the premiums or contributions recorded in the company’s books as due to it in respect of contracts relating to that business commencing in that year or commencing in earlier financial years but not accounted for in the company’s revenue account prior to that financial year, whether or not received by the company during that financial year, after deducting discounts, refunds and rebates of premiums as recorded in respect of the same period and after deducting premiums for reinsurance ceded in respect of that period; and for the purpose of determining whether a premium is due no account shall be taken of any credit arrangements made in respect thereof.

Default in complying with regulation 76(1)

78

A UK or non-EC company commits an offence if it makes default in complying with regulation 76(1) above and is liable, on summary conviction in England and Wales and Scotland, to a fine not exceeding level 5 on the standard scale and, on summary conviction in Northern Ireland, to a fine not exceeding £2,000.

PART XI — STATISTICAL INFORMATION

Interpretation : Part XI

79

In this Part of these Regulations—

(a) references to insurance business, general business and long term business do not include reinsurance business;

(b) “gross premiums” means premiums after deduction of discounts, refunds, rebates of premium and any taxes or levies that are related to those premiums but before deduction of premiums for reinsurance ceded and before deduction of commission payable by the company;

(c) other expressions which are also used in the Insurance Companies (Accounts and Statements) Regulations 1983[^f00039] have the same meanings as in those Regulations.

Insurance statistics: EFTA States and EFTA companies

80

(1) Every company which—

(a) being a UK company, in any calendar year provides general insurance in an EFTA State through an establishment in the United Kingdom; or

(b) being an EFTA company, in any calendar year provides general insurance in an EEA State through an establishment in the United Kingdom,

shall prepare in respect of general insurance so provided by it a statement in Form 82 (analysis of gross premiums receivable by groups of classes) in accordance with the requirements of Schedule 15.

(2) Where in any calendar year the gross premiums so earned in any one State by an establishment in the United Kingdom exceed 2,500,000 ECU, the company shall also prepare an underwriting account in Form 83 or Form 84 as set out in Schedule 15 (or both if appropriate).

(3) Every company which—

(a) being a UK company, in any calendar year provides long term insurance in an EFTA State through an establishment in the United Kingdom; or

(b) being an EFTA company, in any calendar year provides long term insurance in an EEA State through an establishment in the United Kingdom,

shall prepare in respect of long term insurance so provided by it a statement in Form 85 (analysis of gross premiums receivable by each of classes I to VI) in accordance with the requirements of Schedule 15.

(4) The forms mentioned in paragraphs (1), (2) and (3) above shall be prepared separately in respect of each State in which the company provides the insurance.

(5) Where paragraph (1) applies and the conditions specified in paragraph (6) below are met in respect of the provision of general insurance in any one State, the Secretary of State may by notice in writing direct the company in future to prepare an underwriting account in Form 83 or Form 84 as set out in Schedule 15 (or both if appropriate) in respect of the provision of general insurance in that State through its establishment in the United Kingdom.

(6) The conditions referred to in paragraph (5) above are that—

(a) in that calendar year the company earned through all its establishments (in the United Kingdom and elsewhere) gross premiums in excess of 2,500,000 ECU in respect of the provision of general insurance in the State concerned, and

(b) the supervisory authorities of the State in which insurance is provided or, if the head office of the company is situated in an EFTA State, the supervisory authorities of that EFTA State, ask the Secretary of State that an underwriting account be kept by the company’s establishment in the United Kingdom for the operations effected in the State where the insurance is provided.

(7) The statements and any underwriting account required by this regulation shall be printed, and three copies shall be deposited with the Secretary of State within nine months after the end of the calendar year to which they relate; but if in any case it is made to appear to the Secretary of State that the circumstances are such that a longer period than nine months should be allowed, the Secretary of State may extend that period by such period not exceeding three months as he thinks fit.

(8) One of the copies of any document deposited under paragraph (7) above shall be a copy signed by a director, a chief executive or the secretary of the company.

(9) Subject to paragraph 10 below, where—

(a) a UK company which has notified the Secretary of State, in accordance with paragraph 9 of Schedule 2G to the Act[^f00040], of its intention to provide insurance in an EEA State through an establishment in the United Kingdom; or

(b) an EFTA company which has notified the Secretary of State, in accordance with paragraph 23 of Schedule 2F to the Act[^f00041], of its intention to provide insurance in an EEA State through an establishment in the United Kingdom,

does not in any calendar year provide insurance in that State, it shall send to the Secretary of State a notification of that fact within nine months after the end of the calendar year to which the notification relates, signed by a director, a chief executive or the secretary of the company.

(10) Paragraph (9) above shall not apply if the company has, before the beginning of the calendar year, informed the Secretary of State that it no longer intends to provide insurance in the State in question.

(11) The Secretary of State shall consider the documents deposited under paragraph (7) above or the notification given under paragraph (9) and, if any such document or notification appears to him to be inaccurate or incomplete in any respect, he shall communicate with the company with a view to the correction of any such inaccuracies and the supply of deficiencies.

Insurance statistics: other member States

81

(1) Every UK company which in any calendar year—

(a) carries on general business in a member State other than the United Kingdom through a branch in that State; or

(b) provides general insurance in such a State through an establishment in the United Kingdom or another member State,

shall prepare in respect of general business so carried on by it a statement in Form 91 (analysis of financial particulars - branches), or general insurance so provided by it a statement in Form 92 (analysis of financial particulars - provision of insurance), in accordance with the requirements of Schedule 16.

(2) Every UK company which in any calendar year—

(a) carries on long term business in a member State other than the United Kingdom through a branch in that State; or

(b) provides long term insurance in such a State through an establishment in the United Kingdom or another member State,

shall prepare in respect of long term business so carried on by it a statement in Form 93 (analysis of financial particulars - branches), or long term insurance so provided by it a statement in Form 94 (analysis of financial particulars - provision of insurance), in accordance with the requirements of Schedule 16.

(3) The forms mentioned in paragraphs (1) and (2) above shall be prepared separately in respect of each member State in which the company carries on the insurance business or provides the insurance.

(4) The statements required by this regulation shall be printed, and three copies shall be deposited with the Secretary of State within nine months after the end of the calendar year to which they relate; but if in any case it is made to appear to the Secretary of State that the circumstances are such that a longer period than nine months should be allowed, the Secretary of State may extend that period by such period not exceeding three months as he thinks fit.

(5) One of the copies of any statement deposited under paragraph (4) above shall be a copy signed by a director, a chief executive or the secretary of the company.

(6) Subject to paragraph (7) below, where a UK company which has notified the Secretary of State—

(a) in accordance with paragraph 1 of Schedule 2G to the Act, of its intention to establish a branch in a member State other than the United Kingdom; or

(b) in accordance with paragraph 5 of that Schedule, of its intention to provide insurance in such a State,

does not in any calendar year carry on insurance business or, as the case may be, provide insurance in that State, it shall send to the Secretary of State a notification of that fact within nine months after the end of the calendar year to which the notification relates, signed by a director, a chief executive or the secretary of the company.

(7) Paragraph (6) above shall not apply if the company has, before the beginning of the calendar year, informed the Secretary of State, in accordance with paragraph 8 of Schedule 2G to the Act, that it has ceased to carry on insurance business or, as the case may be, to provide insurance in the member State in question.

(8) The Secretary of State shall consider any statements deposited under paragraph (4) above and any notification given under paragraph (6) above and, if any such statement or notification appears to him to be inaccurate or incomplete in any respect, he shall communicate with the company with a view to the correction of any such inaccuracies and the supply of deficiencies.

Default in complying with regulation 80 or 81

82

(1) A UK company commits an offence if it makes default in complying with regulation 80 or 81 above.

(2) An EFTA company commits an offence if it makes default in complying with regulation 80 above.

(3) A person commits an offence if he causes or permits to be included in a form required by regulation 80 or 81 above to be deposited with the Secretary of State a statement which he knows to be false in a material particular or recklessly causes or permits to be so included a statement which is false in a material particular.

(4) A person committing an offence under this regulation is liable, on summary conviction in England and Wales and Scotland, to a fine not exceeding level 5 on the standard scale and, on summary conviction in Northern Ireland, to a fine not exceeding £2,000.

Application of regulations 80 to 82 to Lloyd's

83

(1) Subject to paragraphs (2) and (3) below, regulations 80 to 82 above apply in relation to Lloyd’s as they apply in relation to a UK company.

(2) The information required in the case of Lloyd’s to be included in—

(a) the statements and underwriting account referred to in regulation 80(7) or the notification referred to in regulation 80(9); or

(b) the statement referred to in regulation 81(4) or the notification referred to in regulation 81(6),

is that relating to the members of Lloyd’s taken together.

(3) Any such statements, underwriting account or notification shall be signed by the Chairman or a Deputy Chairman, for and on behalf of the Council of Lloyd's.

PART XII — MISCELLANEOUS PROVISIONS

Transitory provision

84

(1) This regulation applies if in any member State (“the defaulting State”) the third general insurance Directive and the third long term insurance Directive are not fully or substantially implemented on or before 1st July 1994.

(2) Until such date as those Directives are fully or substantially implemented in the defaulting State, these Regulations shall have effect in relation to an insurance company whose head office is in that State as if that State were an EFTA State rather than a member State.

Consequential amendments

85

(1) In paragraph 50 of Schedule 9A to the Companies Act 1985[^f00042], for the words “the Insurance Companies (Credit Insurance) Regulations 1990” there shall be substituted the words “Part X of the Insurance Companies Regulations 1994”.

(2) In the Insurance (Lloyd's) Regulations 1983[^f00043]—

(a) in regulation 2(1), for the words “9(2) of the Insurance Companies Regulations 1981” substitute “22(2) of the Insurance Companies Regulations 1994” and for the words “Part II of the Insurance Companies Regulations 1981” substitute the words “Part IV of the Insurance Companies Regulations 1994”;

(b) in regulation 2(2), for the words “Regulation 2(2) of the Insurance Companies Regulations 1981” substitute the words “Regulation 2(2) of the Insurance Companies Regulations 1994”;

(c) in regulation 3(1)(a), for the words “regulation 53 of, and Schedule 9 to, the Insurance Companies Regulations 1981” substitute the words “regulation 63 of, and Schedule 13 to, the Insurance Companies Regulations 1994”;

(d) in regulation 3(1)(b), replace the comma after the word “reserves)” with a full stop;

(e) in regulation 3(1) full out, omit the words from “and accordingly” to the end;

(f) in regulation 3(2)(b), for the words “Schedules 1 and 2 to the Insurance Companies Regulations 1981” substitute the words “Schedules 3 and 4 to the Insurance Companies Regulations 1994”;

(g) in Schedule 1, for the words “Schedule 1”, “Schedule 2”, “Schedules 1 and 2” and “Insurance Companies Regulations 1981” respectively, substitute the words “Schedule 3”, “Schedule 4”, “Schedules 3 and 4” and “the Insurance Companies Regulations 1994” wherever they occur;

(h) in Schedule 3, paragraph 4, for the words “regulations 25 and 26 of the Insurance Companies Regulations 1981” substitute the words “regulations 27 to 31 of the Insurance Companies Regulations 1994” and after the words “Insurance (Lloyds) Regulations 1983” insert the words “as amended by the Insurance Companies Regulations 1994”;

(i) in Schedule 3, paragraph 5, for the words “regulation 53 (which relates to co-insurance) of the Insurance Companies Regulations 1981” substitute the words “regulation 63 (which relates to co-insurance) of the Insurance Companies Regulations 1994”.

(3) In the Insurance Companies (Amendment) Regulations 1992[^f00044] regulations 13 to 15 (which are superseded by regulations 79 to 83 above) shall cease to have effect.

Revocations

86

The regulations mentioned in Schedule 17 are hereby revoked.

SCHEDULE 1 — INFORMATION TO BE SUBMITTED: LONG TERM BUSINESS

Notes:

This information is not required from applicants already authorised to carry on insurance business in the United Kingdom.

† This information is required only in respect of the classes of insurance business for which new authorisation is being sought.

§ This information shall be provided as if a notice relating to the person concerned were being served on the Secretary of State pursuant to section 60(1)(a) or 61(1)(a) of the Act.

PART I — COMPANIES WHOSE HEAD OFFICE IS IN THE UNITED KINGDOM

The company

1

Date of incorporation, place of incorporation and registered number.

2

Brief summary of the objects of the company.

3

A statement showing the amount by which the assets are expected to exceed liabilities at the date of authorisation (after application of valuation regulations) and how calculated.

4

Date on which the company’s financial year will end.

5

Name and address of the auditors of the company.

6

Names and addresses of the company’s principal bankers.

7

§ Names of the persons who will be directors, controllers or managers of the company. The appropriate particulars specified in Schedule 6 to these Regulations shall be completed for each person listed.

8

Particulars of any association which exists or which is proposed to exist between the directors or controllers of the company and any person who acts or will act as an insurance broker, agent, loss adjuster or reinsurer for the company.

Authorisations to be continued

9

Particulars of classes of insurance business for which the company is already authorised in the United Kingdom and which it wishes to be included in the new authorisation.

Scheme of operations

10

† The sources of business (for example, insurance brokers, agents, own employees or direct selling), and the approximate percentage expected from each source.

11

† The nature of the commitments which the company proposes to cover.

12

† A statement showing for each of the first three financial years following authorisation for each type of contract or treaty, on both optimistic and pessimistic bases and broken down between the United Kingdom, other EEA States and elsewhere—

(a) the number of contracts or treaties expected to be issued,

(b) the total premium income both gross and net of reinsurance, and

13

† The technical bases that the actuary who will be appointed for the purposes of section 19 of the Act proposes to employ for each class of business, including the bases needed for calculating premium rates and mathematical reserves.

14

† The guiding principles as to reinsurance including the company’s maximum retention per risk or event after all reinsurance ceded and the names of the principal reinsurers.

15

The assets which represent or will represent the minimum guarantee fund being assets admissible under and valued in accordance with Part VIII of these Regulations.

16

† The estimated costs of installing the administrative services and organisation for securing business, and the financial resources intended to cover those costs.

Projections

17

For each of the first three financial years following authorisation—

(a) a forecast balance sheet (on both optimistic and pessimistic bases),

(b) a plan (on both optimistic and pessimistic bases) setting out detailed estimates of income and expenditure in respect of direct business, reinsurance acceptances and reinsurance cessions, and

18

The technical bases used to calculate the forecast and estimates specified in paragraph 17 above and the factors used to determine the level of the required margin of solvency assumed for the purposes of paragraph 17(c) above.

Other information, agreements, treaties and certificates required

19

A statement showing the types of investments which are expected to represent the insurance funds and the estimated proportion which will be represented by each type of investment.

20

† Copies or drafts of reinsurance treaties.

21

† Copies or drafts of any standard agreements with brokers or agents.

22

† Copies or drafts of any agreements with persons (other than employees of the company) who will manage the business of the company.

23

† A certificate by the actuary who will be appointed for the purposes of section 19 of the Act that—

(a) he considers the premium rates to be suitable,

(b) he considers the financing of the company to be sufficient to cover both technical reserves and the required margin of solvency during the first three financial years following authorisation, and

PART II — COMPANIES OTHER THAN EC COMPANIES WHOSE HEAD OFFICE IS IN AN EEA STATE OTHER THAN THE UNITED KINGDOM (DIRECT BUSINESS OR BOTH DIRECT BUSINESS AND REINSURANCE)

The company

1

Date of incorporation, place of incorporation and registered number.

2

Copies of the memorandum and articles of association of the company (or their equivalent).

3

Name and address of the auditors of the company in the United Kingdom.

4

Names and addresses of the company’s principal bankers in the United Kingdom.

5

Names of the directors and managers of the company.

6

§ Names of the persons who will be the principal United Kingdom executive, the authorised United Kingdom representative or an employee within section 8(4)(c) of the Act. The appropriate particulars specified in Schedule 6 to these Regulations shall be completed for each person listed.

7

Statement from head office supervisor

8

A statement from the supervisory authority of the EEA State in which the company has its head office stating the classes of insurance business which the company is authorised to carry on in that State, specifying the risks covered there, declaring that the company has the required margin of solvency or minimum guarantee fund and specifying the financial resources from which the costs referred to in paragraph 16 below will be met.

Authorisations to be continued

9

Particulars of classes of insurance business for which the company is already authorised in the United Kingdom and which it wishes to be included in the new authorisation.

Scheme of operations for the United Kingdom

10

† The sources of business in the United Kingdom (for example, insurance brokers, agents, own employees or direct selling) with the approximate percentage expected from each source.

11

† The nature of the commitments which the company proposes to cover in the United Kingdom and the general and special policy or treaty conditions which it proposes to use.

12

† A statement in respect of the United Kingdom business showing for each of the first three financial years following authorisation and for each type of contract or treaty, on both optimistic and pessimistic bases—

(a) the number of contracts or treaties expected to be issued,

(b) the total premium income both gross and net of reinsurance ceded, and

13

† The technical bases that the actuary who will be appointed for the purposes of section 19 of the Act proposes to employ for each class of business in the United Kingdom, including the bases needed for calculating premium rates and mathematical reserves.

14

† The guiding principles as to reinsurance of business written in the United Kingdom including the maximum retention per risk or event after all reinsurance ceded and the names of the principal reinsurers.

15

A statement showing the current margin of solvency of the company, the margin of solvency required and how both have been calculated.

16

† The estimated costs of installing the administrative services and organisation for securing business in the United Kingdom and the financial resources intended to cover those costs.

Projections for the United Kingdom

17

For each of the first three financial years following authorisation, on both optimistic and pessimistic bases—

(a) a forecast balance sheet for the proposed branch, and

(b) a plan setting out detailed estimates of income and expenditure in respect of direct business, reinsurance acceptances and reinsurance cessions of the proposed branch.

18

The technical bases used to calculate the forecast and estimates specified in paragraph 17 above.

Accounts, agreements, treaties and certificates required

19

Balance sheets and profit and loss accounts of the company for each of the last three financial years or, if the company has not been in business for three financial years, for each of the financial years for which it has been in business.

20

A statement showing the types of investments which are expected to represent the insurance funds in the United Kingdom and the estimated proportion which will be represented by each type of investment.

21

† Copies or drafts of any separate reinsurance treaties covering business written in the United Kingdom.

22

† Copies or drafts of any standard agreements which the company will have with brokers or agents in the United Kingdom.

23

† Copies or drafts of any agreements which the company will have with persons (other than employees of the company) who will manage the business of the proposed branch.

24

† A certificate by the actuary who will be appointed for the purposes of section 19 of the Act indicating the sums he considers it will be necessary to transfer from the company’s head office in each of the first three years after authorisation to provide adequate technical reserves in the United Kingdom and stating that—

(a) he considers that the premium rates which will be used in the United Kingdom are suitable, and

(b) he agrees with the information provided under paragraphs 11, 14 and 17 above.

PART III — COMPANIES WHOSE HEAD OFFICE IS NOT IN AN EEA STATE (DIRECT BUSINESS OR BOTH DIRECT BUSINESS AND REINSURANCE)

The company

1

Date of incorporation, place of incorporation and registered number.

2

Brief summary of the objects of the company.

3

A statement of the classes of insurance business which the company is authorised to carry on in the country in which its head office is situated.

4

The assets which represent or will represent the minimum guarantee fund in the United Kingdom being assets admissible under and valued in accordance with Part VIII of these Regulations.

5

Name and address of the auditors of the company in the United Kingdom.

6

Names and addresses of the company’s principal bankers in the United Kingdom.

7

§ Names of the persons who will be directors, controllers or managers of the company, its principal United Kingdom executive, or its authorised United Kingdom representative. The appropriate particulars specified in Schedule 6 to these Regulations shall be completed for each person listed.

8

Authorisations to be continued

9

Particulars of classes of insurance business for which the company is already authorised in the United Kingdom and which it wishes to be included in the new authorisation.

Scheme of operations for the United Kingdom

10

† The sources of business in the United Kingdom (for example, insurance brokers, agents, own employees or direct selling) and the approximate percentage expected from each source.

11

† The nature of the commitments which the company proposes to cover in the United Kingdom and the general and special policy or treaty conditions which it proposes to use.

12

† A statement in respect of United Kingdom business showing for each of the first three financial years following authorisation and for each type of contract or treaty, on both optimistic and pessimistic bases—

(a) the number of contracts or treaties expected to be issued,

(b) the total premium income both gross and net of reinsurance ceded, and

13

† The technical bases that the actuary who will be appointed for the purposes of section 19 of the Act proposes to employ for each class of business carried on in the United Kingdom including the bases needed for calculating premium rates and mathematical reserves.

14

† The guiding principles as to reinsurance of business written in the United Kingdom including the company’s maximum retention per risk or event after all reinsurance ceded and the names of the principal reinsurers.

15

A statement showing the current margin of solvency of the company (after application of valuation regulations), the margin of solvency required and how both have been calculated.

16

† The estimated costs of installing the administrative services and organisation for securing business in the United Kingdom, and the financial resources intended to cover those costs.

Projections for the United Kingdom

17

For each of the first three financial years following authorisation, on both optimistic and pessimistic bases—

(a) a forecast balance sheet for the proposed branch, and

(b) a plan setting out detailed estimates of income and expenditure in respect of direct business, reinsurance acceptances and reinsurance cessions of the proposed branch.

18

The technical bases used to calculate the forecast and estimates specified in paragraph 17 above.

Other information, accounts, agreements, treaties and certificates required

19

Balance sheets and profit and loss accounts of the company for each of the last three financial years or, if the company has not been in business for three financial years, for each of the financial years for which it has been in business.

20

A statement showing the types of investments which are expected to represent the insurance funds in the United Kingdom and the estimated proportion which would be represented by each type of investment.

21

For each of the first three financial years following authorisation, the estimated world-wide premium income of the company both gross and net of reinsurance ceded and broken down between the United Kingdom, other EEA States and elsewhere.

22

A brief description of the risks the company will underwrite outside the United Kingdom.

23

A brief summary of the reinsurance arrangements for the business of the company outside the United Kingdom including the company’s maximum retention per risk or event after all reinsurance ceded and the names of the principal reinsurers.

24

Estimated capital expenditure in respect of operations outside the United Kingdom during each of the first three financial years following authorisation.

25

† Copies or drafts of any separate reinsurance treaties covering business written in the United Kingdom.

26

† Copies or drafts of any standard agreements which the company will have with brokers or agents in the United Kingdom.

27

†Copies or drafts of any agreements which the company will have with persons (other than employees of the company) who will manage the business of the proposed branch.

28

† A certificate by the actuary who will be appointed for the purposes of section 19 of the Act stating that the premium rates which will be used in the United Kingdom are suitable and that he agrees with the information provided under paragraphs 11, 14 and 17 above.

29

† A certificate by the actuary of the company stating that he considers the finances of the company are sufficient—

(a) to meet the required technical reserves for its total business on both optimistic and pessimistic bases in the first three financial years following authorisation, and

(b) to provide the required margin of solvency.

PART IV — COMPANIES WHOSE HEAD OFFICE IS NOT IN THE UNITED KINGDOM (REINSURANCE ONLY)

The company

1

Date of incorporation, place of incorporation and registered number.

2

A brief summary of the objects of the company.

3

A statement showing the classes of insurance business which the company is authorised to carry on in the country in which its head office is situated and particulars of any limitations.

4

Balance sheets and profit and loss accounts of the company for each of the last three financial years or, if the company has not been in business for three financial years, for each of the financial years for which it has been in business.

5

A statement showing the current margin of solvency of the company (after application of valuation regulations), the margin of solvency required and how both have been calculated.

6

Name and address of the auditors of the company in the United Kingdom.

7

Names and addresses of the company’s principal bankers in the United Kingdom.

8

† Names of the persons who will be directors, controllers or managers of the company, its principal United Kingdom executive or its authorised United Kingdom representative. The appropriate particulars specified in Schedule 6 to these Regulations shall be completed for each person listed.

9

Particulars of any association which exists or which is proposed to exist between the directors or controllers of the company and any person who acts or will act as the company’s insurance broker, agent or loss adjuster in the United Kingdom or a retrocessionaire of the company.

Authorisations to be continued

10

Particulars of classes of insurance business for which the company is already authorised in the United Kingdom and which it wishes to be included in the new authorisation.

Scheme of operations for the United Kingdom

11

The sources of business in the United Kingdom (for example, insurance brokers or direct selling) and the approximate percentage expected from each source.

12

† The nature of the commitments which the company proposes to cover in the United Kingdom and the general and special contracts or treaties which it proposes to use.

13

† The technical bases which the actuary who will be appointed for the purposes of section 19 of the Act proposes to employ for each class of business carried on in the United Kingdom, including the bases needed for calculating premium rates and mathematical reserves.

14

(a) the number of contracts or treaties expected to be issued,

(b) the total premium income both gross and net of reinsurance, and

15

† The guiding principles as to reinsurance of business written in the United Kingdom including the company’s maximum retention per risk or event after all retrocessions and the names of the principal retrocessionaires.

16

† The estimated costs of installing the administrative services and organisation for securing business in the United Kingdom and the financial resources intended to cover those costs.

Other information, agreements, treaties and certificates required

17

A brief description of the risks underwritten by the company outside the United Kingdom.

18

A brief summary of the retrocession arrangements for the business written outside the United Kingdom including the company’s maximum retention per risk or event after all retrocessions and the names of the principal retrocessionaires.

19

For each of the first three financial years following authorisation, on both optimistic and pessimistic bases—

(a) a forecast balance sheet, and

(b) a plan setting out detailed estimates of income and expenditure in respect of business accepted and reinsurance cessions broken down between the United Kingdom, other EEA States and elsewhere.

20

The technical bases used to calculate the forecast and estimates specified in paragraph 19 above.

21

A statement of the types of investments which are expected to represent the insurance funds and the estimated proportion which will be represented by each type of investment.

22

† Copies or drafts of any separate reinsurance treaties covering business written in the United Kingdom.

23

† Copies or drafts of any agreements which the company will have with persons (other than employees of the company) who will manage the business of the proposed branch.

24

† Copies or drafts of any standard agreements which the company will have with reinsurance brokers or agents in the United Kingdom.

25

26

A certificate by the actuary of the company stating that he considers the finances of the company are sufficient—

(a) to meet the required technical reserves for its total business on both optimistic and pessimistic bases in the first three financial years following authorisation, and

(b) to provide the required margin of solvency.

SCHEDULE 2 — INFORMATION TO BE SUBMITTED: GENERAL BUSINESS

Notes:

This information is not required from applicants already authorised to carry on insurance business in the United Kingdom.

† This information is required only in respect of the classes of insurance business for which new authorisation is being sought.

§ This information shall be provided as if a notice relating to the person concerned were being served on the Secretary of State pursuant to section 60(1)(a) or 61(1)(a) of the Act.

‡ Premiums, contributions and claims should be shown under the accounting classes specified in regulation 3(1) of the Insurance Companies (Accounts and Statements) Regulations 1983[^f00045].

PART I — COMPANIES WHOSE HEAD OFFICE IS IN THE UNITED KINGDOM

The company

1

Date of incorporation, place of incorporation and registered number.

2

Brief summary of the objects of the company.

3

A statement showing the amount by which assets are expected to exceed liabilities at the date of authorisation (after application of valuation regulations) and how calculated.

4

Date on which the company’s financial year will end.

5

Name and address of the auditors of the company.

6

Names and addresses of the company’s principal bankers.

7

8

Names of main agents in the United Kingdom and other member States.

9

Particulars of any association which exists or which is proposed to exist between the directors and controllers of the company and any person who acts or will act as an insurance broker, agent, loss adjuster or reinsurer for the company.

Authorisations to be continued

10

Particulars of classes of insurance business for which the company is already authorised in the United Kingdom and which it wishes to be included in the new authorisation.

Scheme of operations

11

† The sources of business (for example, insurance brokers, agents, own employees or direct selling) and the approximate percentage expected from each source.

12

† The nature of the risks which the company proposes to cover.

13

† The guiding principles as to reinsurance including the company’s maximum retention per risk or event after all reinsurance ceded and the names of the principal reinsurers.

14

† The assets which represent or will represent the minimum guarantee fund being assets admissible under and valued in accordance with Part VIII of the Regulations.

15

† The estimated costs of installing the administrative services and organisation for securing business, and the financial resources intended to cover those costs and, in relation to general business class 18, the resources available for providing the assistance.

Projections

16

For each of the first three financial years following authorisation—

(a) estimates relating to expenses of management (other than costs of installation) and in particular to current general expenses and commissions,

(b) ‡ estimates relating to premiums or contributions both gross and net of reinsurance and broken down between the United Kingdom, other EEA States and elsewhere and to claims (after all reinsurance recoveries),

(d) estimates relating to the financial resources intended to cover underwriting liabilities and the margin of solvency.

Other information, agreements and treaties required

17

A statement showing the types of the investments which are expected to represent the insurance funds and the estimated proportion which will be represented by each type of investment.

18

† Copies or drafts of reinsurance treaties.

19

† Copies or drafts of any agreements which the company will have with persons (other than employees of the company) who will manage the business of the company.

20

† Copies or drafts of any standard agreements which the company will have with brokers or agents.

21

† Copies or drafts of agreements which the company will have with main agents.

Part II — SWISS GENERAL INSURANCE COMPANIES AND COMPANIES OTHER THAN EC COMPANIES WHOSE HEAD OFFICE IS IN AN EEA STATE OTHER THAN THE UNITED KINGDOM (DIRECT BUSINESS OR BOTH DIRECT BUSINESS AND REINSURANCE)

The company

1

Date of incorporation, place of incorporation and registered number.

2

Copies of the memorandum and articles of association of the company (or their equivalent).

3

Name and address of the auditors of the company in the United Kingdom.

4

Names and addresses of the company’s principal bankers in the United Kingdom.

5

Names of the directors and managers of the company.

6

7

Names of main agents in the United Kingdom.

8

Statement from head office supervisor

9

A statement—

(a) in the case of a company other than a Swiss general insurance company, from the supervisory authority in the State in which the company has its head office stating the classes of insurance business which the company is authorised to carry on in that State; or

(b) in the case of a Swiss general insurance company, from the supervisory authority in Switzerland—

(i) stating the classes of insurance business which the company is authorised to carry on in Switzerland,

(ii) declaring that the company is constituted in Switzerland in a form permitted by Annex 3 to the Agreement signed on 10th October 1989 between the European Economic Community and the Swiss Confederation on direct insurance other than life assurance[^f00046], and

(iii) confirming that the company limits its business to insurance and to operations arising directly therefrom to the exclusion of all other commercial business, and in each case specifying the risks covered there, declaring that the company has the required solvency margin or minimum guarantee fund and specifying the financial resources from which the costs referred to in paragraph 17 below will be met.

Authorisations to be continued

10

Particulars of classes of insurance business for which the company is already authorised in the United Kingdom and which it wishes to be included in the new authorisation.

Scheme of operations for the United Kingdom

11

† The sources of business in the United Kingdom (for example, insurance brokers, agents, own employees or direct selling) and the approximate percentage expected from each source.

12

† The nature of the risks which the company proposes to cover in the United Kingdom and the general and special policy or treaty conditions which it proposes to use.

13

† The tariffs which the company proposes to apply for each category of business.

14

Notwithstanding paragraph 12 or 13 above, the general and special policy or treaty conditions which the company proposes to use and the tariffs which it proposes to apply for each category of business may be omitted—

(a) in the case of direct business, in relation to large risks, and

(b) in the case of reinsurance, in relation to general business class 4, 5, 6, 7, 8, 9, 11, 12, 13, 14, 15 or 16.

15

16

A statement showing the current margin of solvency of the company, the margin of solvency required and how both have been calculated.

17

† The estimated costs of installing the administrative services and organisation for securing business in the United Kingdom and the financial resources intended to cover those costs and, in relation to general business class 18, the resources available for providing the assistance.

Projections for the United Kingdom

18

For each of the first three financial years following authorisation, in relation to the business to be carried on in the United Kingdom—

(a) estimates relating to expenses of management (other than costs of installation) and in particular to current general expenses and commissions,

(b) ‡ estimates relating to premiums or contributions (both gross and net of all reinsurance ceded) and to claims (after all reinsurance recoveries),

(d) the source and nature of the assets which will be used to cover any deficit shown in the forecast balance sheet.

Other information, accounts, agreements and treaties required

19

Balance sheets and profit and loss accounts of the company for each of the last three financial years or, if the company has not been in business for three financial years, for each of the financial years for which it has been in business.

20

21

† Copies or drafts of any separate reinsurance treaties covering business written in the United Kingdom.

22

† Copies or drafts of any standard agreements which the company will have with brokers or agents in the United Kingdom.

23

† Copies or drafts of any agreements which the company will have with persons (other than employees of the company) who will manage the business of the proposed branch.

24

† Copies or drafts of any agreements which the company will have with main agents in the United Kingdom.

PART III — COMPANIES WHOSE HEAD OFFICE IS NOT IN AN EEA STATE (DIRECT BUSINESS OR BOTH DIRECT BUSINESS AND REINSURANCE)

The company

1

Date of incorporation, place of incorporation and registered number.

2

Brief summary of the objects of the company.

3

A statement of the classes of insurance business which the company is authorised to carry on in the country in which its head office is situated.

4

The assets which represent or will represent the minimum guarantee fund in the United Kingdom being assets admissible under and valued in accordance with Part VIII of these Regulations.

5

Name and address of the auditors of the company in the United Kingdom.

6

Names and addresses of the company’s principal bankers in the United Kingdom.

7

§ Names of the persons who will be directors, controllers or managers of the company, its principal United Kingdom executive or its authorised United Kingdom representative. The appropriate particulars specified in Schedule 6 to these Regulations shall be completed for each person listed.

8

9

Names of main agents in the United Kingdom.

Authorisations to be continued

10

Particulars of classes of insurance business for which the company is already authorised in the United Kingdom and which it wishes to be included in the new authorisation.

Scheme of operations for the United Kingdom

11

† The sources of business in the United Kingdom (for example insurance brokers, agents, own employees or direct selling) and the approximate percentage expected from each source.

12

† The nature of the risks which the company proposes to cover in the United Kingdom and the general and special policy or treaty conditions which it proposes to use.

13

† The tariffs which the company proposes to apply for each category of business in the United Kingdom.

14

(a) in the case of direct business, in relation to large risks, and

(b) in the case of reinsurance, in relation general business class 4, 5, 6, 7, 8, 9, 11, 12, 13, 14, 15 or 16.

15

Projections for the United Kingdom

16

For each of the first three financial years following authorisation, in relation to the business to be carried on in the United Kingdom—

(a) estimates relating to expenses of management (other than costs of installation) and in particular to current general expenses and commissions,

(b) ‡ estimates relating to premiums or contributions (both gross and net of all reinsurance ceded) and to claims (after all reinsurance recoveries), and

Other information, accounts, agreements and treaties required

17

‡ Estimates of world-wide premium income both gross and net of reinsurance ceded in each of the first three financial years following authorisation and broken down between the United Kingdom, other EEA States and elsewhere.

18

Brief description of the risks the company will underwrite outside the United Kingdom.

19

Brief summary of the reinsurance arrangements for the business of the company written outside the United Kingdom including the company’s maximum retention per risk or event after all reinsurance ceded and the names of the principal reinsurers.

20

Estimated capital expenditure in respect of operations outside the United Kingdom during each of the first three financial years after authorisation.

21

A statement showing the current margin of solvency of the company (after application of valuation regulations), the margin of solvency required and how both have been calculated.

22

23

Balance sheets and profit and loss accounts of the company for each of the last three financial years or, if the company has not been in business for three financial years, for each of the financial years for which it has been in business.

24

A statement showing the types of the investments which are expected to represent the insurance funds in the United Kingdom and the estimated proportion which would be represented by each type of investment.

25

† Copies or drafts of any separate reinsurance treaties covering business written in the United Kingdom.

26

† Copies or drafts of any standard agreements which the company will have with brokers or agents in the United Kingdom.

27

† Copies or drafts of any agreements which the company will have with persons (other than employees of the company) who will manage the business of the proposed branch.

28

† Copies or drafts of any agreements which the company will have with main agents in the United Kingdom.

PART IV — COMPANIES WHOSE HEAD OFFICE IS NOT IN THE UNITED KINGDOM (REINSURANCE ONLY)

The company

1

Date of incorporation, place of incorporation and registered number.

2

A brief summary of the objects of the company.

3

A statement showing the classes of insurance business which the company is authorised to carry on in the country in which its head office is situated and particulars of any limitation.

4

Balance sheets and profit and loss accounts of the company for each of the last three financial years or, if the company has not been in business for three financial years, for each of the financial years for which it has been in business.

5

A statement showing the current margin of solvency of the company (after application of valuation regulations), the margin of solvency required and how both have been calculated

6

Name and address of the auditors of the company in the United Kingdom.

7

Names and addresses of the company’s principal bankers in the United Kingdom.

8

9

Names of main agents in the United Kingdom.

10

Authorisations to be continued

11

Particulars of classes of insurance business for which the company is already authorised in the United Kingdom and which it wishes to be included in the new authorisation.

Scheme of operations for the United Kingdom

12

† The sources of business in the United Kingdom (for example, insurance brokers or direct selling) and the approximate percentage expected from each source.

13

† The nature of the risks which the company proposes to cover in the United Kingdom and the general and special contracts or treaties which it proposes to use.

14

15

†‡ Estimates of the premium income (both gross and net of reinsurance) in the United Kingdom in each of the first three financial years following authorisation.

16

The estimated costs of installing the administrative services and the organisation for securing business in the United Kingdom and the financial resources intended to cover those costs.

Other information, agreements and treaties required

17

Brief description of risks underwritten by the company outside the United Kingdom.

18

Brief summary of the retrocession arrangements for the business of the company written outside the United Kingdom including the company’s maximum retention per risk or event after all retrocessions and the names of the principal retrocessionaires.

19

For each of the first three financial years following authorisation—

(a) estimates relating to expenses of management (other than costs of installation) and in particular to current general expenses and commissions,

(b) ‡ estimates relating to premiums or contributions (both gross and net of retrocessions) and broken down between the United Kingdom, other EEA States and elsewhere,

(d) a forecast balance sheet, and

(e) estimates relating to the financial resources intended to cover underwriting liabilities and the margin of solvency.

20

A statement showing the types of investments which are expected to represent the insurance funds and the estimated proportion which will be represented by each type of investment.

21

† Copies or drafts of any separate reinsurance treaties covering business written in the United Kingdom.

22

† Copies or drafts of any standard agreements which the company will have with reinsurance brokers or agents in the United Kingdom.

23

† Copies or drafts of any agreements which the company will have with persons (other than employees of the company) who will manage the business of the proposed branch.

24

† Copies or drafts of any agreements which the company will have with main agents in the United Kingdom.

SCHEDULE 3 — GENERAL BUSINESS SOLVENCY MARGIN: FIRST METHOD OF CALCULATION (PREMIUM BASIS)

1

In this Schedule—

“gross premiums”, in relation to an insurance company and a financial year— means premiums after deduction of discounts, refunds and rebates of premium but before deduction of premiums for reinsurance ceded and before deduction of commission payable by the company, and includes premiums receivable by the company under reinsurance contracts accepted by the company;

“receivable”, in relation to an insurance company, a financial year and a premium, means recorded in the company’s books as due to the company in respect of— a contract commencing in that year, or a contract not accounted for in an annual revenue account of the company prior to that year, even though the contract commenced in an earlier financial year, whether or not the company has received the premium;

“recoverable”, in relation to an insurance company and a financial year, means recorded in the company’s books as due in that year, whether or not the company has received any payment.

2

The gross premiums receivable in respect of the company’s entire general business for the last preceding financial year shall be aggregated.

3

From the aggregate arrived at under paragraph 2 above there shall be deducted—

(a) any taxes included in the premiums mentioned in paragraph 2 above, and

(b) any levies that are related to premiums and are recorded in the company’s books as payable in the last preceding financial year in respect of general business.

4

The amount arrived at under paragraph 3 above shall be multiplied by twelve and divided by the number of months in the financial year.

5

If the amount arrived at under paragraph 4 above is more than 10 million units of account, it shall be divided into two portions, the former consisting of 10 million units of account and the latter comprising the excess.

6

Where there has been a division into two portions pursuant to paragraph 5 above, there shall be calculated and added together 18 per cent. and 16 per cent. of the two portions respectively; and where there has been no such division, there shall be calculated 18 per cent. of the amount arrived at under paragraph 4 above.

7

In the case of general business consisting of health insurance based on actuarial principles, paragraph 6 above shall apply with the substitution of “6 per cent.” for “18 per cent.” and “5 1/3 per cent.” for “16 per cent.”, but only if all the necessary conditions are satisfied.

8

For the purposes of paragraph 7 above, the necessary conditions are as follows, that is to say—

(a) the gross premiums receivable shall be calculated on the basis of sickness tables appropriate to insurance business;

(b) the reserves shall include provision for increasing age;

(d) it shall not be possible for the insurer to cancel the contract after the end of the third year of insurance;

(e) the contract shall provide for the possibility of increasing premiums or reducing payments during its currency.

9

Where paragraph 7 above applies to a company whose general business consists partly of health insurance based on actuarial principles and partly of other business, the procedure provided in paragraphs 2 to 7 above shall operate separately for each part of the general business, so as to produce a sum under paragraph 7 above for the health insurance and a sum under paragraph 6 above for the other business.

10

(1) If the provision for claims outstanding at the end of the last preceding financial year exceeds the provision for claims outstanding at the beginning of that year, the amount of the excess shall be added to the amount of claims paid in the last preceding financial year.

(2) If the provision for claims outstanding at the beginning of the last preceding financial year exceeds the provision for claims outstanding at the end of that year, the amount of the excess shall be deducted from the amount of claims paid in the last preceding financial year.

11

(1) For the purposes of paragraph 10 above, the amount of claims paid, in relation to an insurance company and a financial year, is the amount that is recorded in the company’s books as at the end of the financial year—

(a) in relation to general business classes 1 to 17, as paid by it (whether or not payment has been effected in that year) in full or partial settlement of the claims described in sub-paragraph (2) below and the expenses described in sub-paragraph (3) below, or,

(b) in relation to general business class 18, as being the costs borne by the insurance company (whether or not borne in that year) in respect of the assistance given,

less (in either case) any recoverable amounts within the meaning of sub-paragraph (4) below.

(2) The claims mentioned in sub-paragraph (1) above are claims under contracts of insurance (and under contracts of reinsurance accepted by the company) including claims relating to business accounted for over a longer period than a financial year.

(3) The expenses mentioned in sub-paragraph (1) above are expenses (such as, for example, legal, medical, surveying or engineering costs) which are incurred by the company, whether through the employment of its own staff or otherwise, and are directly attributable to the settlement of individual claims, whether or not the individual claims in question are those mentioned in sub-paragraph (1) above.

(4) Recoverable amounts for the purposes of sub-paragraph (1) above are amounts recoverable by the company in respect of the claims mentioned in that sub-paragraph or other claims, including amounts recoverable by way of salvage, amounts recoverable from third parties and amounts recoverable from other insurers but excluding amounts recoverable in respect of reinsurance ceded by the company.

12

(1) For the purposes of paragraph 10 above, the provision for claims outstanding, in relation to an insurance company and a financial year, is (subject to any applicable valuation regulations) the amount set aside by the company as at the beginning or end of the financial year as being an amount likely to be sufficient to meet—

(a) the claims described in sub-paragraph (2) below, and

(b) the expenses described in sub-paragraph (3) below,

less any recoverable amounts within the meaning of sub-paragraph (4) below.

(2) The claims mentioned in sub-paragraph (1) above are claims under contracts of insurance (and under contracts of reinsurance accepted by the company) in respect of incidents occurring—

(a) in the case of an amount set aside as at the beginning of the financial year, before the beginning of that year, and

(b) in the case of an amount set aside as at the end of a financial year, before the end of that year.

being claims which have not been treated as claims paid and including claims relating to business accounted for over a longer period than a financial year, claims the amounts of which have not been determined and claims arising out of incidents that have not been notified to the company.

(3) The expenses mentioned in sub-paragraph (1) above are expenses (such as, for example, legal, medical, surveying or engineering costs) which are likely to be incurred by the company, whether through the employment of its own staff or otherwise, and are directly attributable to the settlement of individual claims, whether or not the individual claims in question are those mentioned in sub-paragraph (1) above.

(4) Recoverable amounts for the purposes of sub-paragraph (1) above are amounts estimated by the company to be recoverable by it in respect of the claims mentioned in that sub-paragraph, including amounts recoverable by way of salvage, amounts recoverable from third parties and amounts recoverable from other insurers but excluding amounts recoverable in respect of reinsurance ceded by the company.

13

From the amount determined under paragraph 10(1) or (2) above there shall be deducted the total sum recoverable in respect of that amount under reinsurance contracts ceded.

14

The amount determined under paragraph 13 above shall be expressed as a percentage of the amount determined under paragraph 10(1) or (2) above.

15

The sum arrived at under paragraph 6 or 7 above or the aggregate of the sums arrived at under those paragraphs, as the case may be, shall be multiplied—

(a) where the percentage arrived at under paragraph 14 above is greater than 50 per cent. but not greater than 100 per cent., by the percentage so arrived at,

(b) where the percentage so arrived at is greater than 100 per cent., by 100 per cent., and

SCHEDULE 4 — GENERAL BUSINESS SOLVENCY MARGIN: SECOND METHOD OF CALCULATION (CLAIMS BASIS)

1

In this Schedule “reference period”, in relation to an insurance company, means either—

(a) the three last preceding financial years, or

(b) the seven last preceding financial years if more than one-half of the gross premiums receivable (as defined in Schedule 3) in that period were in respect of all or any of the following, namely, storm (as included in general business class 8), hail (as included in general business class 9), frost (as included in general business class 9) and credit (as included in general business class 14).

2

If a company has not been in existence long enough to acquire a reference period, this Schedule shall be deemed to give a lower result than that given by Schedule 3 and shall otherwise not apply to the company.

3

Reading this document does not replace reading the official text published on legislation.gov.uk. Contains public sector information licensed under the Open Government Licence v3.0. We assume no responsibility for any inaccuracies arising from the conversion of the original CLML XML to this format.

This text is published under legislation.gov.uk's own terms of reuse, not a Legalize or public-domain licence. legislation.gov.uk
Open Government Licence v3.0 (attribution required)
© Crown and database right. Derived from content available under the Open Government Licence v3.0 from legislation.gov.uk.