Plan and Budget 2008-09

Sub-class B1 General Insurance - provision
£73.8m 2008/09 estimated gross initial funding requirement
Cost drivers
Claims relating to existing estates, such as Independent Insurance and Chester Street, and a share of FSCS management expenses.
Any credit or debit from previous contribution groups?
YES - estimated £73.8m CREDIT, shared between firms in A3 according to their tariff data for 2007/08.*
What will firms in this Sub-class pay?
The net amount to be paid by individual firms is the difference between their share of the £73.8m funding requirement, according to 2008/09 tariff data, less their share (if any) of the £73.8m credit.


Based on current claims estimates, the overall position of firms in the previous contribution group A3 will be neutral, due to an estimated fund balance credit of some £73.8m in contribution group A3 at 31 March 2008.

This is good news for these firms, who also benefited from a £40m refund in January 2008 as a result of higher than forecast recoveries and lower than forecast compensation costs in contribution group A3 during 2007/08.

However, the net amount to be paid by (or credited to) individual firms will depend on tariff data in 2007/08 and 2008/09 as indicated in the table.

Forecast assumptions for the B1 Sub-class are based on recent trends for compensation costs against the insolvent insurance estates with which FSCS currently deals and input from the insolvency practitioners concerned. A number of factors may affect the reliability of these assumptions. Outstanding claims against Independent Insurance Company Limited are likely to be small in number but sizeable in value. Therefore a small swing in the number of claims decided in the year could have a significant impact on funding requirements in this group. Similarly, there is some outstanding litigation concerning the meaning of certain insurance policies.

* Firms will only receive credit or debit notes from previous contribution groups if they were a member of a previous contribution group from 1 April 2007. Details of the transition rules are available from the FSA (PS07/19, FSCS Funding Review - Feedback on CP07/5 and made text).