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HMRC internal manual

General Insurance Manual

HM Revenue & Customs
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Regulatory framework: the FSA return: accident year and underwriting year basis reporting

The Accounts and Statements Rules require separate reporting of business presented on the accident year and the underwriting year bases (see GIM2080). With effect from 1 January 2004, the annual basis is the only permitted basis of accounting for underwriting results (GIM2150), and this usually means an accident year basis of measuring underwriting profit. The underwriting year basis forms must be used for business previously reported on such forms, and any business still presented on the underwriting year basis. Underwriting year accounting can be used in conjunction with annual accounts, and a supplementary note is required to the forms used for business presented on an underwriting year basis explaining why such a basis is used, how it is distinguished from business of the same class presented on an accident year basis, the accounting policy adopted and any differences between risks incepted in the financial year in question and in previous years.

Reporting is required at three levels of detail:

  • a summary level
  • an accounting class level (see GIM3180)
  • a sub-accounting class level.

Form 20 gives the overall summary of the technical account and a summary by accounting class.

Forms 21, 22 and 23 provide analyses of premiums, claims, expenses and provisions by accounting class for business presented on an accident year basis. Forms 24 and 25 provide the same accounting class analysis for underwriting business.

The sub-accounting class analysis is provided on forms 31 and 33 in the form of a ‘risk group’ analysis of direct insurance and facultative (case by case) reinsurance business, and on forms 26 and 27 in the form of a ‘business category analysis of reinsurance treaty business. Forms 34, 35 and 28 and 29 are the equivalents for business presented on the underwriting year basis.