Lloyd's accounting convention attaching premiums and claims to the year the policy was written and leaving the year of account open for three years before closing it by reinsurance to close.
Two conventions can attach a claim to a period. Accident year attaches it to the year the loss occurred; year of account attaches it to the year the policy was written, whatever the date of loss. Lloyd's long used the second, with one particular consequence: a year of account stayed open thirty-six months, long enough for most claims to be known, then closed through an operation called reinsurance to close, by which the following year of account assumes, for a premium, all the residual liabilities of the closed year. That mechanism allows a final result to be reported to investors who committed for a single year, and it is what made annual entry and exit of members possible. Its weak point is the price of the assumption: an underpriced reinsurance to close transfers a liability to the next year of account, hence to different members, and the market's history shows that transfer was the silent vehicle of long-tail liabilities before the crisis of the 1990s.
A 2023 year of account at Lloyd's opens on January 1, 2023 and normally closes on December 31, 2025, its residual liabilities being assumed by the 2026 year against a reinsurance to close premium. Where residual uncertainty is judged too great, the year stays open beyond three years, a rare and heavily documented situation that signals to the market that a liability cannot be reliably quantified.
year of account, exercice de souscription, comptes en trois ans, réassurance de clôture, RITC