The clause in a standard fire policy on buildings that brings outbuildings and the like within the scope of the cover.

accounting for general insurance business whereby a result is determined at the end of the accounting period reflecting the profit or loss from providing insurance cover in that period (compare with fund basis).

1. All listed companies should conduct an annual review to confirm that the company, through its directors and officers, has followed sound practices in terms of corporate governance. The directors must report on key risks facing the company and state how the risks are controlled or avoided. See TURNBULL REPORT. 2. An annual review is also required of managing and members’ agents at Lloyd’s to demonstrate their commitment to, and achievement of, recognised compliance standards.

Statement issued each year of the benefits a member has earned and, based on forecasts, it estimates the pension benefits at retirement age.

This is the official formula for measuring the price of money the true interest rate. APR is the total credit cost expressed as an annual percentage rate of charge.

A method of determining the premiums payable under an insurance contract with the object of keeping the premium of each life insured or member of a pension scheme at a constant rate until there is a change in circumstances.

Financial statements that insurers must submit to the FSA after the end of the financial year in the prescribed format (volume 2 of IPRU (INS)). The returns are made up of: balance sheet and profit and loss account; general business revenue account and additional information; long-term business revenue account and additional information; abstract of the actuary’s annual valuation report; auditor’s report under Companies Act 1985, s.235, for companies incorporated in the UK or the equivalent for companies not so incorporated. Certificates must accompany the report from the directors, the appointed actuary and the auditors. The returns must also include statements about major reinsurers and cedants, the company’s policy on investing in derivatives and a statement of the controllers of the company. Companies engaging in cross-border EEA business must provide separate statistics on this business.

Lloyd’s carries out two annual solvency tests 1. Lloyd’s as a whole (as if a single insurance company) must demonstrate that the total eligible assets of members, coupled with centrally held assets such as the Lloyd’s central fund, exceed their liabilities by the required minimum margin. 2. Lloyd’s must also show that each member has sufficient assets to meet his liabilities and that any shortfall can be covered by centrally held assets. Also each member’s assets must exceed its liabilities by the prescribed margin. This is the higher of 16 per cent of total annual premiums or 23 per cent of average claims, incurred over a three-year period, less a credit for reinsurance recoverables. Lloyd’s must show that it has sufficient central assets to cover any aggregate shortfall from this test. See MEMBER’S MARGIN.

Lloyd’s practice of allocating a risk to the year in which it incepted, linked to the practice of syndicates reforming each year allowing members to leave or join. The syndicate underwriting the risk during the year of inception remains liable even though the year of insurance may straddle two years of account. The year of account is closed after 36 months by a reinsurance to close. The annual venture approach will come to an end when Lloyd’s introduce GAAP accounting; premiums will then be apportioned to particular calendar years with premiums for unexpired periods being carried forward.

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This term refers to the reconstitution of a syndicate as an annual business venture where insurance and reinsurance business is written on a year of account basis.