Technical provisions: periods of account beginning on or after 1 January 2000 and ending before 19 July 2007: General Insurance Reserves (Tax) Regulations: margin for error
Regulation 3: Rule 6: 5% margin for error
Rule 6 required the insurer to find the difference between the original provisions and the recalculated provisions for the same earlier period of account.
The difference was 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 was compared to 5% of the recalculated provisions of £80, namely £4.