30 Net claims and change in insurance liabilities.

Insurance claims are paid in accordance with the individual policy terms typically arising from an insured event.

Long term insurance

Death claims are accounted for on notification of death. Surrenders for non-linked policies are accounted for when payment is made. Critical illness claims are accounted for when admitted. All other long term claims and surrenders are accounted for when payment is due. Claims payable include the direct costs of settlement.

The change in the insurance liability reflects the reduction in liabilities due to the payment of claims in the year, offset by liabilities arising from new business. The movement also reflects assumption changes relating to variables such as claims expectations, expenses and the unwind of the previous period’s expectations.

General insurance

Claims and related reinsurance recoveries are accounted for in respect of all incidents up to the year end. Provision is made on the basis of available information for the estimated ultimate cost, including claims settlement expenses, claims reported but not yet settled and claims incurred but not yet reported. An unexpired risk provision is made for any overall excess of expected claims and deferred acquisition costs over unearned premiums and after taking account of investment return.

(XLS:) Net claims and change in insurance liabilities

 

Long term insurance
2012
£m

General insurance
2012
£m

Total
2012
£m

Long term insurance
2011
£m

General insurance
2011
£m

Total
2011
£m

Claims paid

 

 

 

 

 

 

– gross

5,165

155

5,320

4,823

179

5,002

– reinsurance recoveries

(585)

(1)

(586)

(485)

(1)

(486)

 

4,580

154

4,734

4,338

178

4,516

Change in insurance liabilities

 

 

 

 

 

 

– gross

3,256

12

3,268

2,205

(34)

2,171

– reinsurance recoveries

(193)

(193)

(7)

(7)

Net claims and change in insurance liabilities

7,643

166

7,809

6,536

144

6,680

The roll-forward of the insurance contract liabilities is provided in Note 18.