»Ê¹ÚÌåÓýapp

»Ê¹ÚÌåÓýapp nature of these services can cause some difficulty in determining the correct treatment for VAT purposes. “Run-offâ€� is a technical term applied to situations where an insurer has ceased to underwrite a particular type of insurance, a whole class ofinsurance or any new insurance supplies at all.

In each situation, the insurer will continue to have a liability to deal with claims or any other matters arising as a result of insurance policies already underwritten. Such policies (making up the class of insurance or the whole insurance business) are said to be in “run-off�.

»Ê¹ÚÌåÓýappre are a number of matters which the insurer has a responsibility for whilst in run-off, before the business (or particular policies) can be completely closed down. »Ê¹ÚÌåÓýappse include the following:

claims (which relate to the period for which policies were underwritten) continue to be received - sometimes for many years (although the insurer may have delegated its authorityto third parties to settle claims);

the insurer may need to obtain reinsurance cover to protect its exposure to such claims.»Ê¹ÚÌåÓýapp appropriate level of reinsurance cannot be ascertained until the likely level ofclaims is known or can be estimated;

premiums may be paid and received after the policy goes into run-off, thus necessitating administrative work in accounting for these sums; and

the level of risk against which the original policy was issued may change, which may require an additional or refunded premium. For example, a shipping company may take out a policy in respect of a fleet of a dozen ships. If the number of ships in the fleet is increased or reduces during the period of the policy, a corresponding increase or reduction to the size of the premium will be due. Such “additional� or “return� premiums must also be accounted for.