188体育

Application to members of closed syndicates (regulation 9)

Closed syndicates are those where it has been possible to agree a reinsurance to close amount (in most case with a successor syndicate - see LLM2060). A syndicate member鈥檚 allowable RITC amount for a period of account is the lesser of

• the amount treated as a technical provision for the member (per SI2009/1926 regulation 11, as explained below), and
• the aggregate of the member鈥檚 share of the syndicate unearned premium, unexpired risks and unpaid claims provisions, calculated as though the syndicate were an open syndicate (see 鈥榦pen syndicates鈥� below).

The RITC amount for a syndicate member for a period of account to be treated as a technical provision (regulation 11) is itself the lesser of

• the RITC share paid or given (or treated as paid or given) by the member for the underwriting year whose results are declared and being assessed, and
• the RITC share received or treated as received by the member in respect of the same transaction.

The result of this is that the RITC is treated as a technical provision for a syndicate member subject to the Regulations only to the extent that the member features at both ends of the transaction, closing payment for year 1 and corresponding opening receipt for year 2 in respect of the liabilities transferring between the closing syndicate and its successor. To the extent the payment share cannot be matched it is an ordinary reinsurance premium paid, and to the extent the receipt share cannot be matched it is an ordinary reinsurance premium received. This principle is extended in regulation 11 (3) to include payments between connected persons, as defined in ICTA88/S839 (5) to (8).

Application to members of open syndicates (regulation 10)

The technical provisions here, as for general insurance companies, are the sum of the unearned premiums, unexpired risks and unpaid claims provisions.

An open syndicate is one that makes provisions rather than agrees reinsurance to close - see LLM2070, which refers there to 鈥榬un-off鈥� rather than 鈥榦pen鈥� and to 鈥榚stimate for future liabilities鈥� rather than 鈥榩rovisions鈥�).

General rules and adaptations in Part 3 of SI2009/1926

Regulation 12 provides that the syndicate member鈥檚 share of unpaid claims liabilities is by reference to its proportionate entitlement to participate in the syndicate鈥檚 underwriting business. There is a list of specific adaptations to ensure that the rules in Part 2 of the Regulations which determine what is the appropriate amount of technical provisions for a general insurance company work in a similar fashion for Lloyd鈥檚 syndicate members under Part 3. For example, the reference to 鈥榞eneral insurer鈥� is replaced by one to 鈥榮yndicate鈥� or 鈥榤anaging agent鈥� as the context requires.

It follows that the rules in regulations 5 to 8 apply to the share of unpaid claims liabilities of a member of a Lloyd鈥檚 syndicate in the same way as they would apply to a general insurance company. Where condition A in regulation 5(2) is relevant - confirmation that liabilities for outstanding claims is not excessive, based on skilled person鈥檚 opinion - it is to be given in relation to syndicate liabilities by the managing agent rather than by syndicate members.