Instructions for completion of Form 43
1. In allocating management expenses to the relevant lines:
(a) subject to (b), costs of a non-recurring nature, such as those incurred in developing new systems or new premises, or the costs of corporate restructuring, must be reported as ‘management – other’;
(b) where they do not exceed 2% of the total management expenses, non-recurring costs may be included as ‘management – acquisition’ or ‘management - maintenance’;
(c) the costs incurred in writing new business (or in obtaining incremental (but not indexed) premiums on existing business), such as underwriting, policy issue, setting up (or amending) records, and the maintenance and development of the sales and marketing organisation must be reported as management – acquisition’; and
(d) the balancing item will be expenses related to the ongoing costs throughout the year of maintaining the business in force (including any investment management costs) which must be reported as ‘management – maintenance’.
2. Commission payable to employees of the insurer whose job is to sell policies must be included as ‘management – acquisition’ or ‘management – maintenance’. Commission payable to employees who sell policies on a casual basis must be treated in the same way as that paid to intermediaries and tocedents and so must be included as ‘commission – acquisition’ or ‘commission – other’, as the case may be.
3. Expenses must be those which relate only to the insurer’s long-term insurance business. Those relating to any other business of the insurer cannot, by virtue of INSPRU 1.5.30R, be paid out of thelong-term insurance fund and must therefore be shown in the general insurance business technical account (Form 20) or the non-technical account (Form 16).
4. The entries in line 41 must equal line 11 less the sum of lines 21 and 31.
The entries in line 42 must equal line 12 less the sum of lines 22 and 32.
The entries at line 43 must equal line 13 less the sum of lines 23 and 33.
The entries at line 44 must equal line 14 less the sum of lines 24 and 34.
The entries at line 45 must equal line 15 less the sum of lines 25 and 35.
The entries at line 46 must equal line 16 less the sum of lines 26 and 36.