Aviva 2013 Annual Report Download - page 195

Strategic report Governance IFRS Financial statements Other information
Aviva plc
Annual report and accounts 2013
193
Notes to the consolidated financial statements continued
41 – Insurance liabilities continued
(iv) Movements
The following changes have occurred in the general insurance and health claims provisions during the year:
2013
£m
2012
£m
Carrying amount at 1 January 10,554 10,745
Impact of changes in assumptions (80) 61
Claim losses and expenses incurred in the current year 6,337 6,291
Decrease in estimated claim losses and expenses incurred in prior years (237) (199)
Exceptional strengthening of general insurance latent claims provisions — —
Incurred claims losses and expenses 6,020 6,153
Less:
Payments made on claims incurred in the current year (3,352) (3,243)
Payments made on claims incurred in prior years (3,001) (3,104)
Recoveries on claim payments 285 297
Claims payments made in the year, net of recoveries (6,068) (6,050)
Unwind of discounting 15 35
Other movements in the claims provisions — 2
Changes in claims reserve recognised as an expense (33) 140
Effect of portfolio transfers, acquisitions and disposals (44) (171)
Foreign exchange rate movements (178) (158)
Other movements (1) (2)
Carrying amount at 31 December 10,298 10,554
The effect of changes in the main assumptions is given in note 45 and the economic assumption changes are explained in note 10.
(d) Loss development tables
(i) Description of tables
The tables that follow present the development of claim payments and the estimated ultimate cost of claims for the accident years
2004 to 2013. The upper half of the tables shows the cumulative amounts paid during successive years related to each accident
year. For example, with respect to the accident year 2004, by the end of 2013 £5,843 million had actually been paid in settlement
of claims. In addition, as reflected in the lower section of the table, the original estimated ultimate cost of claims of £6,891 million
was re-estimated to be £5,919 million at 31 December 2013.
The original estimates will be increased or decreased, as more information becomes known about the individual claims and
overall claim frequency and severity.
The Group aims to maintain strong reserves in respect of its general insurance and health business in order to protect against
adverse future claims experience and development. As claims develop and the ultimate cost of claims become more certain, the
absence of adverse claims experience will result in a release of reserves from earlier accident years, as shown in the loss
development tables and movements table (c)(iv) above. However, in order to maintain overall reserve adequacy, the Group
establishes strong reserves in respect of the current accident year (2013) where the development of claims is less mature and there
is much greater uncertainty attaching to the ultimate cost of claims. Releases from prior accident year reserves are also due to an
improvement in the estimated cost of claims.
Key elements of the movement in prior accident year general insurance and health net provisions during 2013 were:
 £32 million release from UK & Ireland, including Group reinsurance business, mainly due to favourable development in health,
commercial motor and commercial liability in Ireland, slightly offset by a small strengthening in the UK.
 £9 million release from Europe mainly due to favourable development across a number of lines of business in France.
 £160 million release from Canada mainly due to continued favourable experience on motor, following the legislative changes
in Ontario.
Key elements of the release from prior accident year general insurance and health net provisions during 2012 were:
 £47 million release from UK & Ireland, including Group reinsurance business, due to favourable development in Group
reinsurance, health and across a number of lines of business in Ireland.
 £51 million release from Europe mainly due to favourable development of personal motor and commercial property claims
in France.
 £122 million release from Canada mainly due to continued favourable experience on motor, following the legislative changes
in Ontario.