76 LV= Annual Report 2012
Notes to the Financial Statements continued
31 December 2012
10. Net benefits and claims
Accounting for net benefits and claims
Long-term insurance contracts
Maturity claims and regular annuity payments are accounted for when due for payment. Surrenders are accounted for on the earlier of the date
when paid or when the policy ceases to be included within the long-term insurance contract liability. Death claims and other claims are accounted
for when the Group is notified. The value of claims on participating insurance contracts includes bonuses paid or payable. Claims values include
related internal and external claims handling costs. Reinsurance recoveries are accounted for in the same period as the related claim.
General insurance contracts
Claims incurred comprise claims and related internal and external claims handling costs paid in the year and changes in the provisions
for outstanding claims, including provisions for claims incurred but not reported and related claims handling costs, together with any other
adjustments to claims from previous years.
The estimated cost of claims includes expenses to be incurred in settling claims and a deduction for the expected value of recoveries. However, it
is likely that the final outcome will prove to be different from the original liability established. Provisions are adjusted at the Statement of Financial
Position date to represent an estimate of the expected outcome.
Group Society
2012 2011 2012 2011
£m £m £m £m
Gross benefits and claims
Long-term insurance contracts
Benefits and claims paid 649.3 667.7 644.2 661.8
Change in the provision for claims 2.4 (4.6) 2.4 (4.5)
General insurance contracts
Claims paid 910.3 816.5 – –
Change in the provision for claims 257.3 189.7 – –
1,819.3 1,669.3 646.6 657.3
Claims ceded to reinsurers
Long-term insurance contracts
Benefits and claims paid (61.8) (54.5) (61.8) (102.4)
General insurance contracts
Claims paid (14.9) (7.4) – –
Change in the provision for claims (34.1) (24.5) – –
(110.8) (86.4) (61.8) (102.4)
1,708.5 1,582.9 584.8 554.9
Net benefits and claims for investment contracts which are deposit
accounted for and not included above (refer to Note 17) 192.6 120.5 192.6 120.5
11. Finance costs
Group Society
2012 2011 2012 2011
£m £m £m £m
Interest expense on loans and borrowings 0.5 0.5 – –
0.5 0.5 – –