Regulation 4
1. In this Schedule—
“gross premiums”, in relation to a society 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 society, and
includes premiums receivable by the society under reinsurance contracts accepted by the society;
“receivable”, in relation to a society, a financial year and a premium, means recorded in the society’s books as due to the society in respect of—
a contract commencing in that year, or
a contract not accounted for in an annual revenue account of the society prior to that year, even though the contract commenced in an earlier financial year,
whether or not the society has received the premium;
“recoverable”, in relation to a society and a financial year, means recorded in the society’s books as due in that year, whether or not the society has received any payment.
2. The gross premiums receivable in respect of the society’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 society’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 ECU, it shall be divided into two portions, the former consisting of 10 million ECU 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 “5⅓ 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;
(c)an additional premium shall be collected in order to set up a safety margin of an appropriate amount;
(d)it shall not be possible for the society to cancel the contract after the end of the third year of insurance;
(e)the contract shall provide for the possiblity of increasing premiums or reducing payments during its currency.
9. Where paragraph 7 above applies to a society 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 a society and a financial year, is the amount that is recorded in the society’s books at the end of the financial year as paid by it (whether or not payment has been effected in that year) in full or partial settlement of—
(a)the claims described in subparagraph (2) below, and
(b)the expenses described in subparagraph (3) below,
less any recoverable amounts within the meaning of subparagraph (4) below.
(2) The claims mentioned in subparagraph (1) above are claims under contracts of insurance (and under contracts of reinsurance accepted by the society) including claims relating to business accounted for over a longer period than a financial year.
(3) The expenses mentioned in subparagraph (1) above are expenses (such as, for example, legal or medical costs) which are incurred by the society, 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 subparagraph (1) above.
(4) Recoverable amounts for the purposes of subparagraph (1) above are amounts recoverable by the society in respect of the claims mentioned in that subparagraph or other claims, including amounts recoverable from third parties and amounts recoverable from other insurers but excluding amounts recoverable in respect of reinsurance ceded by the society.
12.—(1) For the purposes of paragraph 10 above, the provision for claims outstanding, in relation to a society and a financial year, is (subject to any applicable valuation regulations in Part IV of these Regulations) the amount set aside by the society 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 subparagraph (2) below, and
(b)the expenses described in subparagraph (3) below,
less any recoverable amounts within the meaning of subparagraph (4) below.
(2) The claims mentioned in subparagraph (1) above are claims under contracts of insurance 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 society.
(3) The expenses mentioned in subparagraph (1) above are expenses (such as, for example, legal or medical costs) which are likely to be incurred by the society, 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 subparagraph (1) above.
(4) Recoverable amounts for the purposes of subparagraph (1) above are amounts estimated by the society to be recoverable by it in respect of the claims mentioned in that subparagraph, including amounts recoverable from third parties and amounts recoverable from other insurers but excluding amounts recoverable in respect of reinsurance ceded by the society.
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
(c)in any other case, by 50 per cent.