The Insurance Companies (Accounts and Statements) Regulations 1996

Interpretation

3.—(1) In these Regulations, unless the context requires otherwise—

“the 1983 Regulations” means the Insurance Companies (Accounts and Statements) Regulations 1983(1);

“the 1985 Act” means the Companies Act 1985(2);

“the 1986 Order” means the Companies (Northern Ireland) Order 1986(3);

“accounting class” means an accounting class set out in the following table—

Accounting class	Corresponding groups of classes under paragraph 75(3) of the shareholder accounts rules	Corresponding general business classes
1  Accident and health	accident and health	1 (other than 1(p)), 2
2  Motor	motor (third party liability) motor (other classes)	1(p), 10 3
3  Aviation	marine, aviation and transport	1(p), 5, 11
4  Marine		1(p), 6, 12
5  Transport		7
6  Property	fire and other damage to property	4, 8, 9
7  Third party liability	third party liability	13
8  Miscellaneous and pecuniary loss	credit and suretyship, legal expenses, assistance, miscellaneous	14, 15, 16, 17, 18
9  Non-proportional treaty
10  Proportional treaty
11  Marine, aviation and transport treaty

“the Act” means the Insurance Companies Act 1982;

“accumulating with-profits policy” means a with-profits policy which has a readily identifiable current benefit, whether or not this benefit is currently realisable, which is adjusted by an amount explicitly related to the amount of any premium payment and to which additional benefits are added in respect of participation in profits by additions directly related to the current benefit;

“admissible asset” means an asset which is not required by regulation 45(3) of the Insurance Companies Regulations to be left out of account for the purposes specified in regulation 45(1) of those Regulations;

“available assets” means the excess of a company’s assets (other than implicit items) over its liabilities, in each case valued in accordance with the rules contained in Parts VIII and IX and regulation 23 of the Insurance Companies Regulations;

“appointed actuary” means the person appointed as actuary to a company under section 19 of the Act or under any corresponding enactment previously in force;

“charges for management” means amounts chargeable in respect of the management of an internal linked fund in accordance with the conditions of those contracts of insurance under which property linked benefits are linked to the value of the fund or units of the fund;

“claim” means a claim against a company under a contract of insurance;

“claims-made policy” means a contract of liability insurance which provides that no liability is incurred by the company in respect of an incident unless—

(a)

the incident is notified to the company (or its agent or representative); and

(b)

such notification is received by the company (or its agent or representative) before the end of a specified period which is no longer than three years following the final date for which cover is provided under the contract;

“claims management costs” refers to those claims management costs required by the shareholder accounts rules (note (4) to the profit and loss account format) to be included in claims incurred other than those which, whether or not incurred through the employment of the company’s own staff, are directly attributable to particular claims;

“commission payable”, in relation to long term business, means the amounts recorded during a financial year of the company as due to intermediaries and cedants in respect of the inception, amendment or renewal of contracts of insurance, whether or not paid during that year;

“company” means an insurance company;

“contract of insurance” includes a contract of reinsurance;

“direct and facultative” refers to direct insurance business and inwards facultative reinsurance business;

“discounting” refers to discounting or deductions to take account of investment income within the meaning of paragraph 48 of the shareholder accounts rules;

“EEA deposit company” means a company (other than a pure reinsurer) whose head office is not in an EEA State and which has made a deposit in an EEA State other than the United Kingdom in accordance with section 9(2)(b) of the Act;

“established surplus” has the same meaning as in section 30(4) of the Act;

“external company” means a company whose head office is outside the United Kingdom, other than an EC company, an EFTA company, a Swiss general insurance company or a company to which section 9(2) of the Act applies;

“the financial year in question” means the financial year which last ended before the date on which accounts and statements (as hereinafter specified) of the company relating to that financial year are required to be deposited with the Secretary of State pursuant to section 22 of the Act; and the “preceding financial year” and “previous financial years” shall be construed accordingly;

“general business class” means a class of general business specified in Part I of Schedule 2 to the Act except that “general business class 1(p)” means the effecting and carrying out of contracts of insurance against risks of death of or injury to passengers which normally fall within general business class 1, to the extent that a company has elected to attribute such risks to accounting class 2, 3 or 4, as appropriate;

“guarantee fund” has the same meaning as in the Insurance Companies Regulations;

“home foreign business” means general business written in the United Kingdom primarily relating to risks situated outside the United Kingdom, but excluding business in accounting classes 3, 4 and 5 and business where the risk commences in the United Kingdom;

“hybrid linked contract” means a contract of insurance the effecting of which constitutes the carrying on of long term business and which contains an option or options such that at some future time the contract may, according to how such option or options are exercised, constitute either a linked contract or a non-linked contract;

“incepted” has the same meaning as in Part IV of the Insurance Companies Regulations; and “incepting” and “inception” shall be construed accordingly;

“index linked benefits” means benefits—

(a)

provided for under any contract the effecting of which constitutes the carrying on of ordinary long term insurance business; and

(b)

determined by reference to fluctuations in any index of the value of property (whether specified in the contract or not);

“index linked contract” means a linked contract conferring index linked benefits;

“industrial assurance company” means an insurance company to which Part II of the Act applies and which carries on industrial assurance business;

“Insurance Companies Regulations” means the Insurance Companies Regulations 1994(4) as from time to time in force;

“intermediary” means a person who in the course of any business or profession invites other persons to make offers or proposals or to take other steps with a view to entering into contracts of insurance with a company, other than a person who only publishes such invitations on behalf of, or to the order of, some other person;

“internal linked fund” means an account to which a company appropriates certain linked assets and which may be sub-divided into units the value of each of which is determined by the company by reference to the value of those linked assets;

“linked assets” means, in relation to an insurance company, long term business assets of the company which are, for the time being, identified in the records of the company as being assets by reference to the value of which property linked benefits are to be determined;

“linked contract” means a contract of insurance—

(a)

the effecting of which constitutes the carrying on of long term business; and

(b)

under which linked benefits (as defined by section 35A(4) of the Act) are payable to the policy holder;

and “non-linked contract” shall be construed accordingly;

“long term business assets” means assets of an insurance company which are, for the time being, identified as representing the long term fund or funds maintained by the company in respect of its long term business;

“management expenses”, in relation to long term business, means all expenses, other than commission, incurred in the administration of a company or its business;

“mathematical reserves” has the same meaning as in the Insurance Companies Regulations;

“minimum guarantee fund” has the same meaning as in the Insurance Companies Regulations;

“parent undertaking” shall be construed in accordance with section 258 of the 1985 Act(5) and article 266 of the 1986 Order(6);

“period of risk” means the period for which a contract of insurance provides cover;

“permanent health contract” means a contract falling within class IV of long term business as specified in Schedule 1 to the Act;

“profit and loss account”, in relation to a company not trading for profit, means an income and expenditure account;

“property linked benefits” means benefits other than index linked benefits—

(a)

provided for under any contract, the effecting of which constitutes the carrying on of ordinary long term insurance business; and

(b)

determined by reference to the value of, or the income from, property of any description (whether specified in the contract or not);

“property linked contract” means a linked contract conferring property linked benefits;

“proportional reinsurance treaty” means a reinsurance treaty under which a pre-determined proportion of each claim payment by the cedant under policies subject to the treaty is recoverable from the reinsurer; and “non-proportional reinsurance treaty” shall be construed accordingly;

“pure re-insurer” means—

(a)

an insurance company whose head office is in the United Kingdom and whose business is restricted to reinsurance business; or

(b)

an insurance company whose head office is not in the United Kingdom and whose business in the United Kingdom is restricted to reinsurance business;

“receivable”, in relation to a company, a financial year and a premium means due to the company in respect of contracts of insurance incepted during that financial year, whether or not the premium is received during that financial year;

“reinsurance” and “reinsurer” include retrocession and retrocessionaire respectively;

“reinsurance recoveries” means amounts in respect of claims receivable by an insurance company from a reinsurer under a contract of reinsurance;

“required margin of solvency” has the same meaning as in Part IV of the Insurance Companies Regulations;

“required minimum margin” means the greater of the appropriate required margin of solvency and the amount of the appropriate minimum guarantee fund; and “required EEA minimum margin” and “required United Kingdom minimum margin” shall be construed accordingly;

“return” includes every document required by sections 17 and 18 of the Act and prepared in accordance with these Regulations;

“the shareholder accounts rules” means the rules contained in Schedule 9A to the 1985 Act(7) and Schedule 9A to the 1986 Order(8) for the preparation of accounts by insurance companies, as from time to time in force;

“subsidiary” shall be construed in accordance with section 736 of the 1985 Act(9) and article 4 of the 1986 Order(10);

“subsidiary undertaking” shall be construed in accordance with section 258 of the 1985 Act and article 266 of the 1986 Order;

“United Kingdom deposit company” means a company (other than a pure reinsurer) whose head office is not in an EEA State and which has made a deposit in the United Kingdom in accordance with section 9(2)(b) of the Act; and

“with-profits policy” means a contract falling within a class of long term business as specified in Schedule 1 to the Act which is eligible to participate in any part of any established surplus; and “non-profit policy” shall be construed accordingly.

(2) In regulations 19 to 21, 23, 24 and 26 below, and in the Schedules to these Regulations, unless the context otherwise requires—

(a) words and expressions which are also used in Parts IV, VIII and IX of, and Schedules 3, 10 and 12 to, the Insurance Companies Regulations shall have the same meanings as in those Regulations; and

(b) subject to sub-paragraph (a) above, words and expressions which are also used in the shareholder accounts rules shall have the same meanings as in those rules.

(3) In these Regulations—

(a) any reference to long term business or general business shall, in relation to an EEA deposit company or an EFTA company, be taken to refer to long term business or general business carried on by it through a branch in the United Kingdom; and

(b) any reference to general business shall, in relation to a Swiss general insurance company, be taken to refer to general business carried on by it through a branch in the United Kingdom;

and accordingly, any reference to, or requirement imposed in respect of, the accounts and balance sheet (including any notes, statements, reports and certificates annexed thereto) shall be taken as referring to, or imposing the requirement in respect of, business carried on through that branch.

(4) In these Regulations, any reference to long term business or to general business shall—

(a) in relation to an external company (other than a pure reinsurer), be taken to refer to its entire long term business or to its entire general business and to any long term business or general business carried on by it through a branch in the United Kingdom;

(b) in relation to a United Kingdom deposit company, be taken to refer to its entire long term business or to its entire general busines and to any long term business or general business carried on by it through a branch in any EEA State;

and accordingly, any reference to, or requirement imposed in respect of, the accounts and balance sheet (including any notes, statements, reports and certificates annexed thereto) relevant to long term business or to general business shall be taken as referring to or, as the case may be, imposing the requirement in respect of—

(i) accounts prepared in respect of its entire long term business or entire general business; and

(ii) accounts prepared in respect of the long term business or the general business carried on, in the case of an external company, by the branch in the United Kingdom and, in the case of a United Kingdom deposit company, by the branches in question in the EEA States taken together.

(5) In these Regulations—

(a) any reference to a numbered Form is a reference to the Form so numbered in Schedules 1, 2, 3 and 4 below; and

(b) references to a numbered class of general business are references to the class so numbered in Part I of Schedule 2 to the Act.

(1)

S.I. 1983/1811; amended by S.I. 1987/2130; S.I. 1988/672; S.I. 1989/1952; S.I. 1990/1181; S.I. 1990/1333; S.I. 1991/2736; S.I. 1992/2890; S.I. 1993/946; S.I. 1993/3127; S.I. 1994/1515; S.I. 1994/3133 and S.I. 1996/944; and by the European Economic Area Act 1993 (1993 c. 51).

(2)

1985 c. 6.

(3)

S.I. 1986/1032 (N.I.6.).

(4)

S.I. 1994/1516, as amended by S.I. 1994/3133, S.I. 1995/3248 and S.I. 1996/942.

(5)

Section 258 was substituted by the Companies Act 1989 (1989 c. 40), section 21.

(6)

Article 266 was substituted by the Companies (Northern Ireland) Order 1990 (S.I. 1990/593 (N.I.5)), article 23.

(7)

Schedule 9A was substituted by S.I. 1993/3246, reg. 4.

(8)

Schedule 9A was substituted by S.R. (N.I.) 1994 No. 428, reg. 4.

(9)

Section 736 was substituted by the Companies Act 1989, section 144.

(10)

Article 4 was substituted by the Companies (No.2) (Northern Ireland) Order 1990 (S.I. 1990/1504 (N.I.10)), article 62.