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Application provision

1.1 Unless otherwise stated, this Part applies to:

1.1

01/07/2016

Unless otherwise stated, this Part applies to:

  1. (1) all non-directive insurers, other than non-directive friendly societies; and 
  2. (2) subject to 1.2, a Swiss general insurer.

1.2

01/07/2016

This Part only applies to a Swiss general insurer in respect of the activities of the firm carried on from a branch in the UK.

1.3

10/12/2018

In this Part, the following definitions shall apply:

accident year basis

means business not accounted for on an underwriting year basis.

actuarial function

means the function of acting in the capacity of an actuary appointed by a firm under Actuarial Requirements 2.1(1) to perform the duties set out in Actuarial Requirements 5.

available assets

means the excess of a firm’s assets over its liabilities in each case valued in accordance with the Insurance Company – Overall Resources and Valuation Part and any specific valuation rule.

balancing category

means a PRA general insurance business reporting category to which any of the category numbers 409 or 709 has been allocated in column 1 of the table at 12.1.

category of business

means the category numbers as set out in column 2 of the table at 12.3.

category number

means the category number for the PRA general insurance business reporting category listed in column 1 of the table at 12.1.

Chief Executive Function

means the function set out in Large Non-Solvency II Firms – Senior Insurance Management Functions 3.1.

claim

means a claim against an insurer under a contract of insurance.

close links

means as defined in section 4F(3) of Schedule 6 to FSMA.

combined category

means a PRA general insurance business reporting category to which any of the category numbers 001, 002, 003, 110, 120, 180, 220, 260, 270, 280, 330, 350, 500 or 600 have been allocated in column 1 of the table at 12.1.

direct and facultative

means insurance business except reinsurance business that is not inwards facultative reinsurance business.

discounting

means discounting or deductions to take account of investment income within the meaning of paragraph 54 of the insurance accounts rules.

exemption category

means a PRA general insurance business reporting category to which the category numbers 114(p) or 710(p) have been allocated in column 1 of the table at 12.1.

financing arrangement

means any contract (other than a contract of insurance), agreement, correspondence (including side-letters) or understandings that amend or modify or purport to amend or modify any contract or its operation that has been entered into by the insurer, in respect of contracts of insurance written by the insurer, which when considered together with one or more other contracts or arrangements has the effect of increasing the capital resources of the insurer and which includes:

    1. (1) the transfer of assets to the insurer, the creation of a debt to the insurer or the transfer from the insurer to another party of liabilities to policyholders (or any combination of these); and
    2. (2) either an obligation for the insurer to return (with or without interest) some or all of such assets, a provision for the diminution of such debt or a provision for the recapture of such liabilities, in each case, in specified circumstances.

gross undiscounted provisions

means gross undiscounted reported claims outstanding plus gross undiscounted incurred but not reported claims plus gross provision for unearned premiums plus provision for unexpired risks.

Head of Third Country Branch function

means the function set out in Large Non-Solvency II Firms – Senior Management Functions 6.2.

home foreign business

means general insurance business carried on in the UK primarily relating to risks situated outside the UK, but excluding insurance business in category numbers 330, 340, 350, 500, 600 and 700 and the insurance business where the risk commences in the UK.

life protection reinsurance business 

means reinsurance acceptance which are contracts of insurance:

    1. (1) falling within long-term insurance business class 1; or
    2. (2) falling within long-term insurance business class III and providing index-linked benefits;
    3.       that are not:
    4. (3) a with-profits policy; or
    5. (4) whole life assurances; or
    6. (5) contracts to pay annuities on human life; or
    7. (6) contracts which pay a sum of money on the survival of the life assured to a specific date or on his earlier death.

linked assets

means assets held to cover linked long-term liabilities under Insurance Company – Risk Management 4.2.

major cedants

means, in relation to a firm, another insurance undertaking from which (whether alone or with any insurance undertaking which is connected with the other insurance undertaking) the firm has accepted general insurance business under one or more reinsurance treaties for which the gross premiums receivable exceed the greater of:

    1. (1) 5% of the gross premiums receivable by the firm in respect of general insurance business accepted under reinsurance treaties; and
    2. (2) 2% of the gross premiums receivable by the firm in respect of general insurance business,

in the financial year in question or in any of the three preceding financial years of the firm.

major facultative reinsurance contract

means a contract under which general insurance business has been ceded by the firm on a facultative basis:

    1. (1) under which the total amount of premiums payable to any reinsurer (being a major facultative reinsurer) is equal to not less than 0.5% of gross premiums receivable by the firm in respect of general insurance business; or
    2. (2) in relation to which, in respect of any reinsurer (being a major facultative reinsurer) the aggregate of amounts in 4.22(1)(d) and (f) exceeds the sum of £4,000 and 1% of the firm’s liabilities arising from its general insurance business, net of reinsurance ceded. 

major treaty reinsurer

means an insurance undertaking to which (whether alone or with any insurance undertaking which has close links with the other insurance undertaking):

    1. (1) the firm has ceded general insurance business under one or more reinsurance treaties:
      1. (a) in the case of proportional reinsurance, for which the total amount of the reinsurance premiums payable is equal to not less than 2% of the gross premiums receivable by the firm in respect of the general insurance business; or
      2. (b) in the case of non-proportional reinsurance, for which the total amount of the reinsurance premiums payable is equal to not less than 5% of the total premiums payable by the firm in respect of all such non-proportional reinsurance
    2.       in the financial year in question or in any of the five preceding financial years of the firm; or
    3. (2) the aggregate of the amounts referred to in 4.21(1)(d) and (f) exceeds the sum of £20,000 and 5% of the firm’s liabilities arising from its general insurance business, net of reinsurance ceded.

marine mutual

means an insurer:

    1. (1) whose insurance business is restricted to the insurance of its members or their associates against loss, damage, or liability arising out of marine adventures (including losses on inland waters or any risk incidental to any sea voyage); and
    2. (2) whose articles of association, rules or bye laws provide for the calling of additional contributions from, or the reduction of benefits to, the majority of its members, in either case without limit, in order to ensure that the insurer has sufficient financial resources to meet any valid claims as they fall due.

miscellaneous category

means a PRA general insurance business reporting category to which category numbers 400 or 700 have been allocated in column 1 of the table in 12.1.

mixed insurer

means an insurer (other than a pure reinsurer) which carries on reinsurance business and where one or more of the following conditions is met in respect of its reinsurance acceptances:

    1. (1) the premiums collected in respect of those acceptances during the previous financial year exceed 10% of its total premiums collected during that year; and
    2. (2) the technical provisions in respect of those acceptances at the end of the previous financial year exceeded 10% of its total technical provisions at the end of that year.

overseas business

means ‘overseas life assurance business’ as defined in s61 of the Finance Act 2012.

permitted derivatives contract

means a contract involving a derivative or quasi-derivative that satisfied Insurance Company – Risk Management 6 – 8 (excluding 7.7),  as applied in relation to linked assets.

PRA general insurance business reporting category

means a category of general insurance business that consists of the effecting or carrying out of contracts of general insurance falling within the description in column 2 of the table of reporting categories at 12.1.

receivable

means in relation to an insurer, a financial year and a premium, due to the insurer whether or not the premium is received during that financial year.

relevant company

means an insurer whose insurance business is restricted to reinsurance of the marine mutual on terms that provide the marine mutual can cancel the reinsurance arrangements at any time and can require the insurer immediately to transfer its assets and liabilities to the marine mutual.

reporting criteria

means the reporting criteria specified for that Form in column 3 in the table at 12.3.

reporting territory

means one of:

    1. (1) ‘United Kingdom’ if the business is carried on in the UK and is not home foreign business;
    2. (2) ‘Home Foreign’ if the business is home foreign business; or
    3. (3) ‘Non-United Kingdom’ if the business is carried on outside the UK.

required category

means, in relation to a Form, a category number set out in column 2 of the table at 12.3 that:

    1. (1) is, or is included in, a PRA general insurance business reporting category for which the table in 6.16 contains a tick in the row for that PRA general insurance business reporting category and in the column for that Form; and
    2. (2) either:
      1. (a) meets the reporting criteria specified in the entry in column 3 of the table at 12.3 that corresponds to the entry in column 2 for that the category of general insurance business and the entry in column 1 for that Form, or
      2. (b) is required for that Form under 4.15 or 4.16.

return

means the documents required (taken together) to be deposited under 2.4.

risk category

means any PRA general insurance business reporting category that is not a combined category, or balancing category or exemption category

Small Insurer Senior Management Function

means the function set out in Non-Solvency II Firms – Senior Management Functions 3.1.

specific valuation rule

means rules in the Non-Solvency II Firms Sector of the PRA Rulebook that provides in particular circumstances for a particular method of recognition or valuation.

UK life business

means long-term insurance business which is not overseas business or UK pension business.

UK pension business

means long-term insurance business which is ‘pension business’ as defined by the Finance Act 2012.

underwriting year basis

means as defined in 4.7.

whole life assurance

means a contract of insurance which, disregarding any benefit payable on surrender, secures a capital sum only on death or either on death or on disability, but does not include a term assurance.

with-profits actuary function

means the function of acting in the capacity of an actuary appointed by a firm under Actuarial Requirements 2.1(2) to perform the duties set out in Actuarial Requirements 6.

1.4

01/07/2016

In this Part, any reference to a numbered class of insurance business are references to the class so numbered in Schedule 1 of the Regulated Activities Order.