Category: Reinsurance · Reviewed by the Apex broking team · Last reviewed 2026-08-21
Category: Reinsurance Also known as: RITC, closing a year of account, RITC premium Related concepts: follow the settlements, loss reserve
Reinsurance to close (RITC) is a reinsurance contract, specific to Lloyd’s, under which the members of one syndicate year of account transfer their outstanding liabilities to the members of a later year of account in return for a premium. Once the RITC is in place, the earlier year is closed and its result is final for those members; the receiving year takes on the obligation to pay the remaining claims.
Lloyd’s syndicates have historically operated on a three-year accounting basis: a year of account stays open while claims develop and is normally closed at the end of its third year. RITC is the mechanism that permits that closure despite the fact that not all claims arising from the year have been reported or settled.
The managing agent must satisfy itself that the RITC premium is sufficient to meet the liabilities being transferred. That premium is essentially the actuarial estimate of the outstanding claims of the closing year, including claims incurred but not yet reported, together with the future costs of running them off. It is supported by actuarial opinion and is scrutinised by Lloyd’s, because setting it too low pushes a deficit into the receiving year, and setting it too high depresses the closing year’s result unnecessarily.
Most commonly the receiving year is the immediately following year of account of the same syndicate, so the same underwriting team continues to run off the liabilities it created. RITC can also be written into a different syndicate, and there is a specialist market of syndicates formed to accept legacy liabilities in this way.
Closure is not automatic. If the managing agent cannot form a reliable estimate of the outstanding liabilities — typically where exposure is dominated by long-tail or highly uncertain claims — the year is left open and goes into run-off. An open year continues to report, continues to require capital, and continues to defer the final result for its members. Leaving a year open is a significant event rather than routine housekeeping, and it signals genuine uncertainty about ultimate cost.
RITC does three things at once. It gives members of a closing year finality, which is what makes annually subscribed capital workable. It concentrates the uncertainty in a single number — the RITC premium — which can then be tested actuarially and challenged. And it creates a clean transfer point for legacy portfolios, which is the foundation of the run-off market.
The risk it carries is equally concentrated. A materially inadequate RITC premium transfers a loss forward rather than eliminating it, and the strain lands on the members of the receiving year, who did not write the business. This is why reserving quality and the treatment of reinsurance recoveries — including whether reinsurers will follow settlements made after closure — are central to the exercise rather than technical afterthoughts.
RITC does not change your policy. Cover, limits and conditions are unaffected, and you continue to claim in the ordinary way — through the same broker, into the same Lloyd’s claims arrangements. What changes is who ultimately bears the cost behind the scenes, and in some cases which team is handling the run-off. The practical implication for a long-tail buyer, such as a professional indemnity policyholder notifying a circumstance years after the policy period, is that the syndicate name on your certificate may no longer be where the liability sits.
No. The terms of your policy are unchanged and your right to claim is unchanged. RITC transfers the liability between years of account within the Lloyd’s market; it is not a variation of the insurance contract.
It is left open and placed in run-off. The members of that year continue to carry the liabilities and to support them with capital until the position becomes clear enough for a later closure, or until the run-off completes.
The managing agent, supported by actuarial analysis and subject to Lloyd’s oversight. The premium must be sufficient to meet the outstanding liabilities transferred, including claims incurred but not reported and the cost of running them off.
This entry is part of the Apex Insurance Wiki. Last reviewed 2026-08-21. Next review: 2027-02-21.
Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.
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