LLD 15.4 Risk groups for general insurance business

In assessing what are appropriate risk groups for reporting purposes the Society should ensure where possible that:

1. (1)

   each risk group should include only risks from within a single accounting class and in relation to a single country;

2. (2)

   policies are not included in the same risk group where, having regard to the patterns of risk, claims incurrence and settlement patterns, it is necessary to group them separately for the purposes of applying statistical methods in calculating the provision for claims outstanding in accordance with generally accepted accounting practice; and

3. (3)

   claims-made policies are not included in the same risk group as policies which are not claims-made policies, except:

   1. (a)

      where this is not possible without disproportionate expense; and

   2. (b)

      where the policies within the risk group do not exhibit materially different characteristics.

Subject to LLD 15.4.2 R (1) and LLD 15.4.2 R (2) and LLD 15.4.3 G (3), the Society may in respect of any accounting class include all insurance business carried on by members in any country in any financial year as a single risk group.

Notwithstanding the provisions of LLD 15.4.2 R (1) and LLD 15.4.2 R (2) and LLD 15.4.3 G (3), the Society may classify all insurance business carried on by members in any country in respect of any accounting class in any financial year as a single risk group, as long as gross premiums written for that year in respect of that insurance business are less than 5% of the world-wide gross premiums written for all accounting classes for that year.

The requirements to report a separate risk group in LLD 15.4.2 R (1) do not apply where, in the case of any financial year, the gross premiums receivable for that year in respect of that risk group would be less than £1million.