Prudential Regulation Authority Rulebook

1.1

Unless otherwise stated, this Part applies to a non-directive friendly society.

1.2

In this Part, the following definitions shall apply:

amount of claims paid

means, in relation to a financial year, the amount that is recorded in the firm’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:

1. (1) claims including claims relating to business accounted for over a longer period than a financial year; and
2. (2) expenses (including legal or medical costs) which are incurred by the firm, 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 (1),

less any amounts recoverable by the firm in respect of the claims mentioned in (1) or other claims, including amounts recoverable from third parties and amounts recoverable from other insurance undertakings but excluding amounts recoverable in respect of reinsurance ceded by the firm.

capital at risk

means:

1. (1) in any case in which an amount is payable in consequence of death other than a case falling within (2), the amount payable on death; or
2. (2) in any case in which the benefit under the contract in question consists of the making, in consequence of death, of the payment of an annuity, payment of a sum by instalments or any other kind of periodic payments, the present value of that benefit,

less in either case the mathematical reserves in respect of the relevant contracts.

gross premiums

means, in respect of a financial year, premiums after deduction of discounts, refunds and rebates of premiums but before deduction of premiums for reinsurance ceded and before deduction of commission payable.

gross premiums earned

means, in respect of a financial year, such proportion of gross premiums receivable as is attributable to risk borne by the firm during that financial year.

provision for claims outstanding

means, in respect of a financial year, the amount set aside by the firm as at the beginning or end of the financial year as being an amount likely to be sufficient to meet:

1. (1) claims in respect of incidents occurring:
1. (a) in the case of an amount set aside as at the beginning of the financial year, before the beginning of that year; and
2. (b) in the case of an amount set aside as at the end of a financial year, before the end of that year,
2. 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 firm; and
3. (2) expenses (such as, for example, legal or medical costs) which are likely to be incurred by the firm, 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 (1),

less any recoverable amounts estimated by the firm to be recoverable by it in respect of the claims mentioned in (1), including amounts recoverable from third parties and amounts recoverable from other insurance undertakings but excluding amounts recoverable in respect of reinsurance ceded by the firm.

receivable

means such amounts as become due to a firm, whether or not received (including, where appropriate, income which has accrued) in respect of contracts of insurance incepted in the relevant period.

recoverable

means, in relation to a financial year:

1. (1) for the purpose of a provision for claims outstanding, amounts estimated by the firm to be recorded in the firm’s books as due in that year; or
2. (2) otherwise, recorded in the firm’s books as due in that year, whether or not the firm has received any payment.

reference period

means the three last preceding financial years.