GIM6260 - Technical provisions: periods of account beginning on or after 1 January 2000 and ending before 19 July 2007: General Insurance Reserves (Tax) Regulations: margin for error
Regulation 3: Rule 6: 5% margin for error
Rule 6 required the insurer to find the difference between the original provisions and the recalculated provisions for the same earlier period of account.
The difference was compared to a margin for error of 5% of the recalculated provisions.
For example, if the figure of original provisions for the 2000 period of account was 拢100, and the discounted cost of settling them as at 31 December 2000 - the recalculated provisions - was 拢80, the difference between them is 拢20. This was compared to 5% of the recalculated provisions of 拢80, namely 拢4.