46/99
9 March 1999
REVISED INSURANCE FEES ANNOUNCED
Regulations setting out the fees that insurance companies and Lloyd's will pay from 1 April 1999 were announced today by the Treasury.
The fees are charged to recover costs incurred by the Treasury in carrying out certain statutory supervision functions, or by the Financial Services Authority (FSA) under the terms of an agreement made with the Treasury.
The level of fees is fixed according to the amount of gross premium income receivable by an insurance company in a financial year. No fees will be collected from UK branches of companies (other than pure re-insurance companies) based in the European Economic Area which are
supervised in their home state.
It is estimated that the total amount to be raised in fees in 1999-2000 will be £12,200,000.
The current 1998-1999 tariff has been changed so as to distribute more evenly the burden of fees across all the companies which have a potential liability to pay fees, and to take account of changes in the approach to supervision and to recover the costs of anticipated increases in regulatory activity, as described in the published Plan and Budget 1999-2000 of the Financial Services Authority.
NOTES TO EDITORS
1. The Insurance (Fees) Regulations (SI No 589/1999) are made under powers given to the Treasury in the Insurance (Fees) Act 1985 which amended the Insurance Companies Act 1982. The 1999-2000 regulations replace the Insurance (Fees) Regulations 1998.
2. Insurance company fees are set to recover the full costs of the Treasury's statutory functions, specified in Regulation 10, essentially statutory supervision and proposals for
United Kingdom and European legislation.
3. There are about 840 insurance companies authorised to carry on business in the United Kingdom but not all these are authorised by the Treasury, some being authorised by another EEA member state. Treasury authorises an estimated 750, some of which are no longer underwriting new business.
4. The revised tariff of fees is as follows:
Gross premium Fee
Up to £500,000 £300
Over £500,000 up to and including £2,000,000 £1,000
Over £2,000,000 up to an including £5,000,000 £6,500
Over £5,000,000 up to and including £20,000,000 £6,000
Over £20,000,000 up to and including £75,000,000 £27,500
Over £75,000,000, £40,000
The largest groups of insurance companies (those including seven or more companies) will pay a maximum fee of £280,000. The Council of Lloyd's will pay a fee of £200,000.
5. Insurance companies in the process of winding up, and those whose authorisation to effect new business has been withdrawn are not required to pay a fee.
6. Insurance companies authorised by the Treasury are required to deposit certain specified documents, generally at annual intervals, under Section 22 (1) of the Insurance Companies Act 1982. The Council of Lloyd's is required to deposit a statement annually under Section 86(1) of the 1982 Act. Fees are payable when such documents are deposited.
7. The Plan and Budget of the Financial Services Authority for 1999-2000 was published in February 1999. Copies can be obtained from the Authority at
25 The North Colonnade
Canary Wharf
London E14 5HS.
Tel: +44(0) 207 676 1000;
Fax +44 (0) 207 676 1099.