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HMRC internal manual

General Insurance Manual

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HM Revenue & Customs
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Regulatory framework: the FSA return: summary of the content of forms

The following gives a brief summary of the FSA forms required for general insurance business.

Statement of Solvency and Balance Sheet
 
Revenue/Profit and Loss Account
Accident year accounting forms
Underwriting year accounting forms
Other forms

Statement of Solvency and Balance Sheet

Form 1: Statement of Solvency - general insurance business

This compares the capital resources (Form 3) with the ‘general insurance capital requirement’ (from Form 12) and indicates whether the company is solvent for regulatory purposes.

Form 3: Components of capital resources

This identifies the insurer’s capital resources, in accordance with the requirements of INSPRU 1. See also GIM3140.

Form 10: Statement of net assets

This is a balance sheet summary. For general business the assets figure comes from Form 13 (other than long-term business assets) and the liabilities figure from Form 15. Information is split between long term and general business. A composite (long-term and general) company will have to complete both sections.

Forms 11/12: Calculation of general insurance capital requirement - premiums amount and brought forward amount, and claims amount and result

There are two methods of measuring the required margin of solvency for general business, one based on the company’s premium income, the other on the claims it has incurred. The two calculations are made on Forms 11 and 12. Form 12 compares the results and the higher figure is the required general insurance capital requirement used on Form 1.

Form 13: Analysis of admissible assets

Assets are analysed into categories and valued according to the Rules. The total assets figure is taken to Form 10. The instructions require separate Forms 13 for long term business assets and all other assets, and categories are specified for UK branches of external insurers and EEA branches of UK deposit insurers. See also GIM3140.

Form 15: Liabilities (other than long term insurance business)

This analyses general business liabilities (and other liabilities not directly related to the insurance business such as loans and taxation) into categories and includes inter alia the technical provisions brought forward and carried forward. Total liabilities are taken to Form 10.

Form 17: Analysis of derivative contracts

This requires the value of derivative contracts that are assets of the company at the end of each financial year, analysed into futures, options and contracts for differences.

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Revenue/Profit and Loss Account

Form 16: Profit and loss account (non-technical account)

This is a profit and loss account for the entire business. It normally includes the investment return relating to general insurance business as well as the underwriting results from Form 20 (general business) and (if applicable) the transfer of surplus from Form 40 (long term business). It will show any distribution made to shareholders and the retained profit or loss for the financial year.

Form 20: General insurance business: technical account (excluding equalisation provisions)

This shows

  • the balance of underwriting for all general business from this year’s accident year accounting
  • adjustments for prior years’ accident year accounting
  • adjustments from underwriting year accounting, and
  • any allocated investment return.

Form 20 is prepared in summary to show total business results (balance to Form 16) and additionally a separate form is prepared for each accounting class. Figures are returned net of reinsurance.

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Accident year accounting forms

Form 21: General Business: analysis of premiums

Separate forms are required for each accounting class. Premiums are analysed by period of inception and are given both gross and net of reinsurance. Across the form premiums are analysed between the amounts earned in the year and unearned at the end of the financial year. The net totals are taken to Form 20. The return is for direct and facultative insurance business.

Form 22: Analysis of claims, expenses and technical provisions

Separate forms are required for each accounting class. Claims are analysed between current year incidents and previous year incidents both gross and net of reinsurance. Claims are further analysed into claims incurred and provision for unexpired risks. Across the form the figures are split between the amount brought forward, paid and carried forward to give the amount attributable to the financial year. Expenses and commissions are also apportioned to the correct financial year. Claims are shown undiscounted and related adjustments for discounting are shown separately. The return is for direct and facultative business.

Form 23: General insurance business: Analysis of net claims and premiums

Separate forms are required for each accounting class. Claims paid and outstanding in this financial year are analysed by accident year. Carried forward claims are divided into reported and IBNR. Discounting, earned premiums, the deterioration or surplus of the original reserve, and the percentage claims ratio are shown. Information is returned net of reinsurance. The return is for direct and facultative business.

Forms 26/27: General insurance business: Analysis of claims and premiums by category for treaty reinsurance

Form 26 is the same as for Form 23 except it is for treaty reinsurance. Separate forms are required for each accounting class and each category of treaty business (see GIM3180).

Form 27 is as for Form 26 but on a gross basis.

Forms 31/32: General insurance business: Analysis of gross claims and premiums

This form requires information similar to that shown on Form 23 but for gross claims and premiums. Separate forms are required for each accounting class and risk group. It includes number of claims as well as amounts paid.

Form 32 is similar but for motor business.

Form 33: General insurance business: Reconciliation of gross claims and premiums for direct and facultative business

Reconciliation business is any direct and facultative business not classified into risk groups and not reported on Forms 31 and 32. It is simpler in format to these forms.

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Underwriting year accounting forms

Forms 24/28: General business (underwriting year accounting): Analysis of premiums, claims and expenses

A separate Form 24 is required for each accounting class. It shows information for the underwriting year in question and the nine previous underwriting years with all pre-1993 aggregated into a prior years’ column. This form requires a supplementary note to explain the reason for using the underwriting year basis, the basis for distinguishing accident year and underwriting year business in the same class and the accounting policy (annual or non-annual) for determining claims provisions. The form is for direct and facultative business.

Form 28 is similar but for treaty reinsurance.

Form 25/29: General business (underwriting year accounting): Analysis of technical provisions

This is in the same format as Form 24 but for reported claims, IBNR, claims management costs, discounting adjustments, the balance of the fund, UPP, URP, deferred acquisition costs and other provisions.

Form 29 is similar but for treaty reinsurance.

Form 34: General insurance business (underwriting year accounting): Analysis of gross claims and premiums by risk groups for direct and facultative reinsurance

Similar to Form 31 but on underwriting year business. It shows for each underwriting year gross claims paid, brought and carried forward, the balance of each underwriting year, gross premiums written and the percentage claims ratio. A separate continuation sheet is required for third party business.

Form 35: General insurance business (underwriting year accounting): Reconciliation of gross claims and premiums for direct insurance and facultative reinsurance

This form applies to business which is not classified into risk groups and not reported on Form 34. It is similar to Form 33 but for underwriting year business.

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Other forms

Form 30: General insurance business: expected income yield from admissible assets covering discounted provisions

The form has 2 sheets, first for an analysis of assets by major currencies, and secondly by asset type. It is completed whenever an adjustment for discounting is included in Forms 22 or 25. It includes details on hypothecated assets, yield, the amount of the discount and the interest rates at which the discount is calculated.

Form 36: Currency rates

This form reports the exchange rates used where business is reported in foreign currencies on Forms 26-29 and 31-35 and where these amounts are included on other forms in sterling.

Form 37: Equalisation provisions

This form shows the premiums written and the equalisation provision and amounts brought and carried forward to it for each business group A to E (GIM7030) and for credit insurance business. The figures at lines 28 and 29 are carried to Forms 15 and 16.

Form 38/39: Equalisations provisions: technical account

Form 38 shows the calculation of the equalisation provisions for entry in Form 37.

Form 39 is similar but for underwriting year business.