they were circulat ed!
Conclusions
9 As you will see from the Tables above, our proposed approach is undoubtedly more cautious than current practice and represents a not inconsiderable tightening of policy. We now need to reach a decision quickly on whether to adopt the new approach in order to enable us to plan for its introduction from the start of the new Budget year and, more importantly, to inform the Budget setting process. As Table 2 above demonstrates allowance will need to be made in the forthcoming Budget to accommodate the proposed scheme for weighting. In particular, the impact of 'Door 4' reinsurance business (scored at 25%), which is a factor likely to be of increased importance and size in the forthcoming year, is likely to be marked. The consequences of having to 'ration' such cover do not, I think, need highlighting here. I should emphasise that we are not proposing to alter the method for recording business already underwritten which would affect both the level of current exposure and the cover currently available. There will, of course, always be those cases, often sizeable, which do not
which do not fall neatly. into a clearly defined set of criteria. In such circumstances these unusual cases would have to be considered on a case-by-case basis.
10 Once you have had time to digest the contents of this letter I would welcome your comments. If you have
any questions in-the- meantime, Victor Lunn-Rockliffe and his team would be happy to help.
11 Finally, as it is clearly important that EGC should understand the methodology for counting exposure under PMS controls I suggest that this letter and my earlier letter and paper of 8 January... should be circulated round EGC before the meeting on 4 March This will make it much easier to explain how these impact on our proposals for next year's budget.
Yours
M V HAWTIN
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