# The Insurance Companies Regulations 1994, Paragraph 12


(1) For the purposes of paragraph 10 above, the provision for claims outstanding, in relation to an insurance company and a financial year, is (subject to any applicable valuation regulations) the amount set aside by the company as at the beginning or end of the financial year as being an amount likely to be sufficient to meet—
(a) the claims described in sub-paragraph (2) below, and
(b) the expenses described in sub-paragraph (3) below,
less any recoverable amounts within the meaning of sub-paragraph (4) below.
(2) The claims mentioned in sub-paragraph (1) above are claims under contracts of insurance (and under contracts of reinsurance accepted by the company) in respect of incidents occurring—
(a) in the case of an amount set aside as at the beginning of the financial year, before the beginning of that year, and
(b) in the case of an amount set aside as at the end of a financial year, before the end of that year.
being claims which have not been treated as claims paid and including claims relating to business accounted for over a longer period than a financial year, claims the amounts of which have not been determined and claims arising out of incidents that have not been notified to the company.
(3) The expenses mentioned in sub-paragraph (1) above are expenses (such as, for example, legal, medical, surveying or engineering costs) which are likely to be incurred by the company, whether through the employment of its own staff or otherwise, and are directly attributable to the settlement of individual claims, whether or not the individual claims in question are those mentioned in sub-paragraph (1) above.
(4) Recoverable amounts for the purposes of sub-paragraph (1) above are amounts estimated by the company to be recoverable by it in respect of the claims mentioned in that sub-paragraph, including amounts recoverable by way of salvage, amounts recoverable from third parties and amounts recoverable from other insurers but excluding amounts recoverable in respect of reinsurance ceded by the company.

---
Source: https://www.legislation.gov.uk/uksi/1994/1516/schedule/3/paragraph/12 (the official version)
Page: https://openlegislation.uk/insurance-companies-regulations-1994/schedule-3/paragraph-12
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.