35 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.

 

Long term insurance
2014
£m

General insurance
2014
£m

Total
2014
£m

Long term insurance
2013
£m

General insurance
2013
£m

Total
2013
£m

Claims paid

 

 

 

 

 

 

– Gross

5,519

182

5,701

5,558

156

5,714

– Reinsurance recoveries

(995)

(1)

(996)

(792)

(792)

 

4,524

181

4,705

4,766

156

4,922

Change in insurance liabilities

 

 

 

 

 

 

– Gross

9,352

18

9,370

55

(2)

53

– Reinsurance recoveries

22

(1)

21

(321)

(321)

Net claims and change in insurance liabilities

13,898

198

14,096

4,500

154

4,654

The roll-forward of the insurance contract liabilities is provided in Note 22.