If your treaty is subject to Florida Hurricane Catastrophe Fund (FHCF) inuring protection, or other inuring amounts you can register this on the From Ground Up tab, if your System Administrator has activated the functionality.
In order to register the Inuring Recovery, you must first register the FGU advisory, as described earlier in this section, as the calculation is based on the FGU figures.
To register Inuring Recovery: # Open the From Ground Up tab of the claim for which you want to register Inuring Recovery From the latest advisory, open the sub tab Inuring Recovery From the menu, select New.
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When the non-proportional policy/business allows for a specific deductible for the claim (not included in the excess), this can be recorded on the Policy Deductible tab. The Policy Deductible will be considered in the FGU Calculation, and will be deducted from the FGU Advisory Amounts prior to the distribution.
Example:
Limit: 200,000 xs 125,000
Claim: 175,000
PD:25,000
Loss to layer:175,000 less 25,000 less 125, 000 = 25,000
Create New Policy Deductible # When you have been informed that there is a Policy Deductible, or that the Policy Deductible Amount has changed, you can create a new Policy Deductible.
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If a proportion of the non-proportional claim is retained by the cedent for example, SICS allows you to take this factor into account in the FGU Calculation. The co-insurance is deducted after the Policy Deductible and can be applied to both the Limit amounts and the Claim Figures (that is all the amounts in the FGU Advisory), or to the Claim Figures only.
Co-insurance applied to Claim Figures only # Each of the FGU Advisory figures is recalculated as follows:
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When the non-proportional Claim and/or Limit information should be reduced for any reason, for example legal sessions, this can be taken into account in the FGU Calculations by defining Reduction Information. The reduction will be applied to the Claim Figures and/or Limit information after the Policy Deductible and Co-insurance. The Reduction can be applied to Claim Figures, Claim Figures and Covers, Covers, or Deductible only. Each of these methods are described below.
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On the Claim condition there is a possibility to record a Cost/Expense clause and a Calculation Method. This will impact the FGU Distribution depending on the selected calculation method.
Cost Clause defined as None or Part of Liability # When the Cost clause is defined as either None or Part of Liability they are considered as part of the Loss Amounts. The system deducts the excess proportionally from both. Note that if you have inuring amounts, the system calculates the proportionate excess using amounts net of inuring amounts.
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When a non-proportional section has an interest clause defined, this enables the FGU Advisory fields for interest and the system will distribute the interests as follows:
Interest Clause Defined as None # If Interest calculation has been defined as NONE the advisory fields are disabled.
Interest Clause defined as No Automatic Calculation # The FGU advisory fields for interest are enabled, but the system will not distribute to the layers.
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Index calculation of claims is common in markets where the inflation is very high, or the nature of the policy is long tailed. To ensure that the reinsured has the same cover that he originally bought in monetary terms, despite inflation, and that the reinsurers are not held liable for claims before the reinsured has retained a share equivalent to the monetary amount agreed upon at contract inception, an index clause is introduced.
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One way to obtain coverage for a reduced premium for the cedent, but at the same time ensure full coverage for big losses, is to include a Franchise Deductible condition. The Franchise works so that the cedent will retain a certain percentage of losses that would normally affect the layer (Franchise %) as an additional retention. However, when the loss exceeds the defined Trigger Amount, the cedent is ensured of full coverage, that is no additional retention.
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Another way for the cedent to obtain lower premium is to include an Annual Aggregate Deductible condition. The cedent must then retain a certain amount of losses otherwise recoverable. Contrary to the Franchise Deductible, the AAD is normally considered for the entire section as a whole, or in case of combined AAD, a number of sections, and not each loss separately. The exception is when the AAD is recorded as a Percentage of Loss.
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Having performed all the calculations of limits and claim figures, and taking into consideration amounts already booked, the system calculates and displays the result in the Suggested Distribution Display List.
Field description 42. - Suggested Distribution Display List Field Description Location Business ID The unique identifier generated by SICS by which the business linked to the claim is known. FGU Recording Section The name of the section the claim is linked to.
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