Interests

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. The excess amounts will be deducted from the Loss Amounts only. Manually booked interest amounts will be reflected in the Distribution.

Interest Clause Defined as Proportionate Stabilised #

The excess is deducted from the loss amounts only. To calculate the distribution the system must consider any information recorded on the Interest Calculation Method defined on the claim.

When an interest clause has been defined as “proportionate stabilised” on a non-proportional business, you can for each claim define whether the Interest should be calculated based on Incurred Figures, Paid and Incurred Figures, or Paid Figures.. This selection is made on the FGU tab of the claim.

Record Interest Proportionate Stabilised Calculation Method #

1. Open the claim for which you want to record the Interest Calculation method.
2. Click the FGU tab and then click the Interest calculation sub-tab.
3. Click the Edit button.
4. Select the required calculation method.

If the claim’s interest calculation method has been defined as Incurred, or has not been defined the distribution is calculated as follows:

• Paid interest = Paid interest FGU less distributed retention less distributed underlying layers, maximum Incurred Interest.
• Incurred interest = Incurred loss to layer / Incurred Loss FGU * Incurred Interest FGU.
• Reserve interest = Incurred interest less Paid interest.

If the claim’s interest calculation method has been defined as Paid and Incurred Figures, the calculation is as follows:

• Paid interest = Paid loss to layer / FGU Paid loss * Paid Interest FGU.
• Incurred interest = Incurred loss to layer/ FGU Incurred loss * Incurred Interest FGU.
• Reserve interest = Incurred interest - Paid interest.

If the claim’s interest calculation method has been defined as Paid Figures, the calculation is as follows:

• Paid interest = Paid loss to layer / FGU Paid loss * Paid Interest FGU.
• Incurred interest = Paid interest
• Reserve interest = 0

Edit Interest Calculation Method #

1. Open the claim for which you want to edit the interest calculation method.
2. Click the FGU tab and then click the Interest calculation sub tab.
3. Click the Edit button.
4. Change the calculation method as required.
5. Click OK.

The new calculation method will be taken into consideration with the next Advisory.