FSA guidance on IPRU(INS) Appendix 9.2 Form 20A instruction 2

Rule IPRU(INS) 9.15(1)(a) requires firms which carry on general insurance business to prepare Form 20A as part of their FSA return. Form 20A is set out in IPRU(INS) Appendix 9.2.

Instruction 2 to Form 20A is inconsistent with the heading of column 4. Therefore it is unclear what those general insurance business firms that report part or all of their business on an underwriting year basis are required to show in column 4 to Form 20A.

Form 20A column 4 is headed 'Provision for gross unearned premium …'. Instruction 2 to Form 20A says the amounts entered under column 4 'must equate to F21.19.2 + F25.22.12 as if …'. However, the provision for unearned premiums shown at F25.22.12 is net of reinsurance, not gross.

To clarify the requirement, we hope to consult on changing the instructions for Form 20A. But until we resolve the inconsistency, we will accept either treatment, provided firms follow it consistently throughout the form. That is, firms may enter in column 4 to Form 20A amounts that are either:

    1. provision for gross unearned premium (as required by the column heading); or
    2. as instruction 2 to Form 20A requires.

Firms should state, in the new supplementary note to the Form (code 20Am), whether their entries in column 4 to Form 20A are gross unearned premiums or in line with instruction 2.

This guidance does not apply to firms that account for their entire business on an accident year basis in their FSA return.