LAM15350 | Excess expenses losses and deficits: Loss reform: shock losses: requirements for a valid shock loss claim: CTA10/S269ZK and CTA10/S269ZL

An insurance company may claim that losses of an accounting period (AP) are shock losses providing certain conditions are met. The conditions are: -

• The AP in which the shock loss arises begins on or after 1 April 2017

• The loss must be capable of being carried forward to a later AP, and

• The loss-making period and the solvency shock period (see LAM15310) must have one or more days in common.

The claim must:

• be made within 2 years of the AP in which the loss arises (or a further period allowed by an officer of HMRC)

• set out the solvency loss and the solvency shock period the losses relate to

• state the company’s solvency capital requirement (SCR) at the beginning of the solvency shock period

• set out the amount and calculation of the shock loss threshold

• be submitted with:

  • the information specified in CTA10/S269ZL(1)(b)(i), and

  • a report by the company’s chief actuary (or equivalent if not a PRA-authorised person) confirming that the submitted information was: prepared in line with the relevant requirements if it had been disclosed in the company regulatory return; and the solvency loss and shock loss threshold have been calculated in accordance with the shock loss rules.

The claim may specify more than one solvency shock period but they must not overlap.