Calculate Deductions
If you want the SICS to calculate the Deductions, the conditions must be defined. (Ref. chapter Handle Deduction Conditions.). Conditions may be equal for all Retrocessionaire Participations (RP’s) or one or more of the RP’s may have special Deduction conditions entered.
Calculate Commission #
Commission, if defined, is calculated whenever you run the Retrocession Calculation order. Available calculation methods are;
None
No calculation of Commission is performed.
Original
All bookings with Entry Codes within the Entry Code Sub Category Original Commission are multiplied with the Share of the RP. The result of the calculation is booked on the RP’s Business Ledger As Booking with the original Entry Code(s).
Example:
Retrocessionaire’s Share = 10%
| Business Ledger OCC ‘As Booking’ |
Business Ledger RP ‘As Booking’ |
||
|---|---|---|---|
| Entry Code | Amount | Entry Code | Amount |
| *)20 | 30.000 | 20 | 3.000 |
| *)COMM | 25.000 | COMM | 2.500 |
*) Entry Codes defined in Entry Code Sub Category Original Commission
Percent
All Premium bookings that are in accordance with the Entry Code Group selected as Premium Basis in the Deduction Conditions are multiplied with the Share of the RP and the Commission percentage. Which Entry Codes to be included in the Entry Code Groups are decided by your System Administrator.
The result of the calculation is booked on the RP’s Business Ledger As Booking with the Entry Code defined in the system parameter Entry Code Usage, Calculation Commission. Which Entry Code is selected for the calculation, is decided by your System Administrator.
Example:
Entry Code defined for Calculation Commission = ‘20’
Commission = 20%, Retrocessionaire’s Share = 10%
| Business Ledger OCC ‘As Booking’ |
Business Ledger RP ‘As Booking’ |
||
|---|---|---|---|
| Entry Code | Amount | Entry Code | Amount |
| *) 10 | 50.000 | 10 | 5.000 |
| *) PREM | 200.000 | PREM | 20.000 |
| 20 | **) 5.000 |
*) Entry Codes in Entry Code Sub Category Premium
**) The Premium Basis is dependent on the definition of the selected Entry Code Group. Refer to Entry Code Group Category ‘Subject Premium Income, Proportional’. (In this example; 10 and PREM).
Original + Percent
This is a combination of calculation methods Original and Percent. The result of the calculation is booked on the RP’s Business Ledger As Booking with the Entry Code defined in the system parameter Entry Code Usage, Calculation Commission and with the original Entry Code(s) if different from the one defined in the system parameter. Which Entry Code is selected for the calculation, is decided by your System Administrator.
Example:
Entry Code defined for Calculation Commission = ‘20’
Commission = 20%, Retrocessionaire’s Share = 10%
| Business Ledger OCC ‘As Booking’ |
Business Ledger RP ‘As Booking’ |
||
|---|---|---|---|
| Entry Code | Amount | Entry Code | Amount |
| *) 10 | 50.000 | 10 | 5.000 |
| *) PREM | 200.000 | PREM | 20.000 |
| *)20 | 30.000 | 20 | ***) 8.000 |
| *)COMM | 25.000 | COMM | 2.500 |
*) Entry Codes in Entry Code Sub Category Premium
**) Entry Codes in Entry Code Sub Category Original Commission
***) The Premium Basis is dependent on the definition of the selected Entry Code Group. Refer to Entry Code Group Category Subject Premium Income, Proportional. (In this example; 10 and PREM).Calculated as (50.000 * 10% * 20%) + (200.000 * 10% * 20%) + (30.000 * 10%)
Calculate Overriding Commission #
Overriding Commission, if defined, is calculated whenever you run the Retrocession Calculation order. Available calculation methods are;
None
No calculation of Overriding Commission is performed.
Original
All bookings with Entry Codes within the Entry Code Sub Category Overriding Commission are multiplied with the Share of the Retrocessionaire Participations (RP). The result of the calculation is booked on the RP’s Business Ledger As Booking with the original Entry Code(s).
Example
Retrocessionaire’s Share = 10%
| Business Ledger OCC ‘As Booking’ |
Business Ledger RP ‘As Booking |
||
|---|---|---|---|
| Entry Code | Amount | Entry Code | Amount |
| *)22 | 1.000 | 20 | 100 |
| *)OVER | 3.000 | OVER | 300 |
*) Entry Codes defined in Entry Code Sub Category Overriding Commission
Percent
All Premium bookings that are in accordance with the Entry Code Group selected as Premium Basis in the Deduction Conditions, are multiplied with the Share of the RPand the Overriding Commission percentage. Which Entry Codes to be included in the Entry Code Groups are decided by your System Administrator.
The result of the calculation is booked on the RP’s Business Ledger As Booking with the Entry Code defined in the system parameter Entry Code Usage, Calculation Overriding Commission. Which Entry Code is selected for the calculation, is decided by your System Administrator.
Example:
Entry Code defined for Calculation Overriding Commission = ‘22’
Overriding Commission = 5%, Retrocessionaire’s Share = 10%
| Business Ledger OCC ‘As Booking’ |
Business Ledger RP ‘As Booking’ |
 : | |
|---|---|---|---|
| Entry Code | Amount | Entry Code | Amount |
| *)10 | 50.000 | 10 | 5.000 |
| *)PREM | 200.000 | PREM | 20.000 |
| 22 | **)1.250 |
*) Entry Codes in Entry Code Sub Category Premium
**) The Premium Basis is dependent on the definition of the selected Entry Code Group. Refer to Entry Code Group Category Subject Premium Income, Proportional. (In this example; 10 and PREM).
Original + Percent
This is a combination of calculation methods Original and Percent. The result of the calculation is booked on the RP’s Business Ledger As Booking with the Entry Code defined in the system parameter Entry Code Usage, Calculation Overriding Commission and with the original Entry Codes if different from the one defined in the system parameter. Which Entry Code is selected for the calculation, is decided by your System Administrator
Example:
Entry Code defined for Calculation Overriding Commission = ‘22’
Overriding Commission = 5%, Retrocessionaire’s Share = 10%
| Business Ledger OCC ‘As Booking’ |
Business Ledger RP ‘As Booking’ |
||
|---|---|---|---|
| Entry Code | Amount | Entry Code | Amount |
| *)10 | 50.000 | 10 | 5.000 |
| *)PREM | 200.000 | PREM | 20.000 |
| **)22 | 1.000 | 22 | ***)1.350 |
| **)OVER | 3.000 | OVER | 300 |
*) Entry Codes in Entry Code Sub Category Premium
**) Entry Codes defined in Entry Code Sub Category Overriding Commission
***) The Premium Basis is dependent on the definition of the selected Entry Code Group. Refer to Entry Code Group Category Subject Premium Income, Proportional. (In this example; 10 and PREM). Calculated as (50.000 * 10% * 5%) + ( 200.000 * 10% * 5%) + (1.000 * 10%)
Max Allowable Commission #
The total of the Original Commission and the Overriding Commission to be booked on the Retrocessionaire Participation Business Ledger is checked against the percentage entered. If the total is higher than the Max Allowable Commission, the Overriding Commission is reduced accordingly. If the total is not higher than the percentage entered, the Overriding Commission is calculated and booked according to the Overriding Commission percentage defined on the condition.
Note! When running the order on non-cumulative basis (field Is Cumulative on Retrocession Calculation order is not selected), the calculation of the Overriding Commission is calculated using the figures from the current Account (not taken previous Accounts within the same Accounting Year in consideration).
Example:
Entry Code defined for Calculation Overriding Commission = ‘22’
Max Allowable Commission = 25%
Commission = Original
Overriding Commission = 5%
Retrocessionaire’s Share = 10%
| Business Ledger OCC ‘As Booking’ |
Business Ledger RP ‘As Booking’ |
||
|---|---|---|---|
| Entry Code | Amount | Entry Code | Amount |
| *)10 | 50.000 | 10 | 5.000 |
| *)PREM | 200.000 | PREM | 20.000 |
| **)20 | 30.000 | 20 | 3.000 |
| **)COMM | 25.000 | COMM | 2.500 |
| 22 | ***) 750 |
*) Entry Codes in Entry Code Sub Category Premium
**) Entry Codes in Entry Code Sub Category Original Commission
***) Max Allowable Commission is (5.000 + 20.000) * 25% = 6.250. Overriding Commission is (5.000 + 20.000) * 5% = 1.250. As total Commission + Overriding Commission will exceed the Max Allowable Commission amount, the Overriding Commission Amount is reduced accordingly so that total not exceeding 6.250. The Premium Basis is dependent on the definition of the selected Entry Code Group. Refer to Entry Code Group category Subject Premium Income, Proportional.(In this example; 10 and PREM).
Calculate Brokerage #
Brokerage, if defined on the deduction condition, is calculated whenever you run the Retrocession Calculation order.
Note! The Brokerage booked on the OCC Business Ledger As Original is always retroceded and booked on the RPs Business Ledger As Booking independent of the Brokerage condition being defined or not. To avoid Brokerage from the OCC Business Ledger As Original to be retroceded, the Entry Code Transformation Term can be entered on the OCC.
Available calculation methods are;
None
No calculation of Brokerage is performed (except from the Brokerage retroceded from the OCC Business Ledger As Original).
Original
As Brokerage booked on the OCC Business Ledger As Original is always retroceded and booked on the RP’s Business Ledger As Booking, this calculation method should NOT be selected. (If selected, the Original Brokerage will be booked twice).
Percent
All Premium bookings that are in accordance with the Entry Code Group selected as Premium Basis in the Deduction Conditions are multiplied with the Share of the RP and the Brokerage percentage. Which Entry Codes to be included in the Entry Code Groups are decided by your System Administrator.
The result of the calculation is booked on the RP’s Business Ledger As Booking with the Entry Code defined in the system parameter Entry Code Usage, Calculation Brokerage. Which Entry Code is selected for the calculation, is decided by your System Administrator
Example:
Entry Code defined for Calculation Brokerage = ‘26’
Brokerage = 2%, Retrocessionaire’s Share = 10%
| Business Ledger OCC ‘As Booking’ |
Business Ledger RP ‘As Booking’ |
||
|---|---|---|---|
| Entry Code | Amount | Entry Code | Amount |
| *) 10 | 50.000 | 10 | 5.000 |
| *) PREM | 200.000 | PREM | 20.000 |
| 26 | **) 500 |
*) Entry Codes in Entry Code Sub Category Premium
**) The Premium Basis is dependent on the definition of the selected Entry Code Group. Refer to Entry Code Group Category ‘Subject Premium Income, Proportional’. (In this example; 10 and PREM).
Original + Percent
This is a combination of calculation methods Original and Percent. As Brokerage booked on the OCC Business Ledger As Original is always retroceded and booked on the RP’s Business Ledger As Booking this calculation method should NOT be selected. (If selected, the Original Brokerage will be booked twice).
Calculate Tax on Premium #
Tax on Premium, if defined, is calculated whenever you run the Retrocession Calculation order. Available calculation methods are;
None
No calculation of Tax on Premium is performed.
Original
All bookings with Entry Codes within the Entry Code Sub Category Tax on Premium are multiplied with the Share of the Retrocessionaire Participations (RP’s). The result of the calculation is booked on the RP’s Business Ledger As Booking with the original Entry Code(s).
Example
Retrocessionaire’s Share = 10%
| Business Ledger OCC ‘As Booking’ |
Business Ledger RP ‘As Booking |
||
|---|---|---|---|
| Entry Code | Amount | Entry Code | Amount |
| *)28 | 2.000 | 28 | 200 |
| *)TAX | 4.000 | TAX | 400 |
*) Entry Codes defined in Entry Code Sub Category Tax on Premium
Percent
All Premium bookings that are in accordance with the Entry Code Group selected as Premium Basis in the Deduction Conditions are multiplied with the Share of the RP and the Tax on Premium percentage. Which Entry Codes to be included in the Entry Code Groups are decided by your System Administrator.
The result of the calculation is booked on the RP’s Business Ledger As Booking with the Entry Code defined in the system parameter Entry Code Usage, Calculation Tax on Premium Which Entry Code is selected for the calculation, is decided by your System Administrator.
Example:
Entry Code defined for Calculation Tax on Premium = ‘28’
Overriding Commission = 8%, Retrocessionaire’s Share = 10%
| Business Ledger OCC ‘As Booking’ |
Business Ledger RP ‘As Booking’ |
||
|---|---|---|---|
| Entry Code | Amount | Entry Code | Amount |
| *) 10 | 50.000 | 10 | 5.000 |
| *) PREM | 200.000 | PREM | 20.000 |
| 28 | **)2.000 |
*) Entry Codes in Entry Code Sub Category Premium.
**) The Premium Basis is dependent on the definition of the selected Entry Code Group. Refer to Entry Code Group Category Subject Premium Income, Proportional. (In this example; 10 and PREM).
Original + Percent
This is a combination of calculation methods Original and Percent. The result of the calculation is booked on the RP’s Business Ledger As Booking with the Entry Code defined in the system parameter Entry Code Usage, Calculation Tax on Premium and with the original Entry Code(s) if different from the one defined in the system parameter. Which Entry Code is selected for the calculation, is decided by your System Administrator.
Example:
Entry Code defined for Calculation Tax on Premium = ‘28’
Tax on Premium = 8%, Retrocessionaire’s Share = 10%
| Business Ledger OCC ‘As Booking’ |
Business Ledger RP ‘As Booking’ |
||
|---|---|---|---|
| Entry Code | Amount | Entry Code | Amount |
| *)10 | 50.000 | 10 | 5.000 |
| *)PREM | 200.000 | PREM | 20.000 |
| **)28 | 2.000 | 28 | ***)2.200 |
| **)TAX | 4.000 | TAX | 400 |
*) Entry Codes in Entry Code Sub Category Premium.
**) Entry Codes defined in Entry Code Sub Category Tax on Premium
***) The Premium Basis is dependent on the definition of the selected Entry Code Group. Refer to Entry Code Group Category Subject Premium Income, Proportional. (In this example; 10 and PREM). Calculated as (50.000 * 10% * 8%) + ( 200.000 * 10% * 8%) + (2.000 * 10%)
Calculate Fronting Fee #
Fronting Fee, if defined, is calculated whenever you run the Retrocession Calculation order. Available calculation methods are;
None
No calculation of Fronting Fee is performed.
Original
All bookings with Entry Codes within the Entry Code Sub Category Fronting Fee are multiplied with the Share of the Retrocessionaire Participations (RP). The result of the calculation is booked on the RP’s Business Ledger As Booking with the original Entry Code(s).
Example:
Retrocessionaire’s Share = 10%
| Business Ledger OCC ‘As Booking’ |
Business Ledger RP ‘As Booking |
||
|---|---|---|---|
| Entry Code | Amount | Entry Code | Amount |
| *)29 | 3.000 | 29 | 300 |
| *)FFEE | 6.000 | FFEE | 600 |
*) Entry Codes defined in Entry Code Sub Category Fronting Fee
Percent
All Premium bookings that are in accordance with the Entry Code Group selected as Premium Basis in the Deduction Conditions are multiplied with the Share of the RP and the Fronting Fee percentage. Which Entry Codes to be included in the Entry Code Groups are decided by your System Administrator.
The result of the calculation is booked on the RP’s Business Ledger As Booking with the Entry Code defined in the system parameter Entry Code Usage, Calculation Fronting Fee. Which Entry Code is selected for the calculation, is decided by your System Administrator.
Example:
Entry Code defined for Calculation Fronting Fee = ‘29’
Fronting Fee = 6%, Retrocessionaire’s Share = 10%
| Business Ledger
OCC ‘As Booking’ | Business Ledger
RP ‘As Booking’ |
| Entry Code | Amount | Entry Code | Amount |
| *) 10 | 50.000 | 10 | 5.000 |
| *) PREM | 200.000 | PREM | 20.000 |
| | | 29 | **) 1.500 |
*) Entry Codes in Entry Code Sub Category Premium.
**) The Premium Basis is dependent on the definition of the selected Entry Code Group. Refer to Entry Code Group Category Subject Premium Income, Proportional. (In this example; 10 and PREM).
Original + Percent
This is a combination of calculation methods Original and Percent. The result of the calculation is booked on the RP’s Business Ledger As Booking with the Entry Code defined in the system parameter Entry Code Usage, Calculation Fronting Fee and with the original Entry Code(s) if different from the one defined in the system parameter.’ Which Entry Code is selected for the calculation, is decided by your System Administrator.
Example:
Entry Code defined for Calculation Fronting Fee = ‘29’
Fronting Fee = 6%, Retrocessionaire’s Share = 10%
| Business Ledger OCC ‘As Booking’ |
Business Ledger RP ‘As Booking’ |
||
|---|---|---|---|
| Entry Code | Amount | Entry Code | Amount |
| *)10 | 50.000 | 10 | 5.000 |
| *)PREM | 200.000 | PREM | 20.000 |
| **)29 | 3.000 | 29 | ***)1.800 |
| **)FFEE | 6.000 | FFEE | 600 |
*) Entry Codes in Entry Code Sub Category Premium.
**) Entry Codes defined in Entry Code Sub Category Fronting Fee
***) The Premium Basis is dependent on the definition of the selected Entry Code Group. Refer to Entry Code Group Category Subject Premium Income, Proportional. (In this example; 10 and PREM). Calculated as (50.000 * 10% * 6%) + ( 200.000 * 10% * 6%) + (3.000 * 10%)
Calculate Fire Brigade Charges #
Fire Brigade Charges, if defined, is calculated whenever you run the Retrocession Calculation order. Available calculation methods are;
None
No calculation of Fire Brigade Charges is performed.
Original
All bookings with Entry Codes within the Entry Code Sub Category Fire Brigade Charges are multiplied with the Share of the Retrocessionaire Participations (RP). The result of the calculation is booked on the RP’s Business Ledger As Booking with the original Entry Code(s).
Example:
Retrocessionaire’s Share = 10%
| Business Ledger OCC ‘As Booking’ |
Business Ledger RP ‘As Booking |
||
|---|---|---|---|
| Entry Code | Amount | Entry Code | Amount |
| *)24F | 1.000 | 24F | 100 |
| *)FBRG | 2.000 | FBRG | 200 |
*) Entry Codes defined in Entry Code Sub Category Fire Brigade Charges
Percent
All Premium bookings that are in accordance with the Entry Code Group selected as Premium Basis in the Deduction Conditions are multiplied with the Share of the RPand the Fire Brigade Charges percentage. Which Entry Codes to be included in the Entry Code Groups are decided by your System Administrator.
The result of the calculation is booked on the RP’s Business Ledger As Booking with the Entry Code defined in the system parameter Entry Code Usage, Calculation Fire Brigade Charges Which Entry Code is selected for the calculation, is decided by your System Administrator.
Example:
Entry Code defined for Calculation Fire Brigade Charges = ‘24F’
Fire Brigade Charges = 4%, Retrocessionaire’s Share = 10%
| Business Ledger OCC ‘As Booking’ |
Business Ledger RP ‘As Booking’ |
||
|---|---|---|---|
| Entry Code | Amount | Entry Code | Amount |
| *) 10 | 50.000 | 10 | 5.000 |
| *) PREM | 200.000 | PREM | 20.000 |
| 24F | **) 1.000 |
*) Entry Codes in Entry Code Sub Category Premium.
**) The Premium Basis is dependent on the definition of the selected Entry Code Group. Refer to Entry Code Group Category Subject Premium Income, Proportional. (In this example; 10 and PREM).
Original + Percent
This is a combination of calculation methods Original and Percent. The result of the calculation is booked on the RP’s Business Ledger As Booking with the Entry Code defined in the system parameter Entry Code Usage, Calculation Fire Brigade Charges and with the original Entry Code(s) if different from the one defined in the system parameter. Which Entry Code is selected for the calculation, is decided by your System Administrator.
Example:
Entry Code defined for Calculation Fire Brigade Charges = ‘24F’
Fire Brigade Charges = 4%, Retrocessionaire’s Share = 10%
| Business Ledger OCC ‘As Booking’ |
Business Ledger RP ‘As Booking’ |
||
|---|---|---|---|
| Entry Code | Amount | Entry Code | Amount |
| *)10 | 50.000 | 10 | 5.000 |
| *)PREM | 200.000 | PREM | 20.000 |
| **)24F | 1.000 | 24F | ***)1.100 |
| **)FBRG | 2.000 | FBRG | 200 |
*) Entry Codes in Entry Code Sub Category Premium.
**) Entry Codes defined in Entry Code Sub Category Fire Brigade Charges
***) The Premium Basis is dependent on the definition of the selected Entry Code Group. Refer to Subject Premium Income, Proportional. (In this example; 10 and PREM).
Calculated as (50.000 * 10% * 4%) + ( 200.000 * 10% * 4%) + (1.000 * 10%)
Calculate Other Deduction #
Other Deduction, if defined, is calculated whenever you run the Retrocession Calculation order. Available calculation methods are;
None
No calculation of Other Deduction is performed.
Original
All bookings with Entry Codes within the Entry Code Sub Category Other Deduction are multiplied with the Share of the Retrocessionaire Participations (RP). The result of the calculation is booked on the RP’s Business Ledger As Booking with the original Entry Code(s).
The entry codes within the sub category “Other Deduction” are treated in a special way in Retrocession Calculation order. To have all the entry codes within the sub category “Other Deductions” booked on the As Original ledger of the OCC retroceded to the ORP, only ONE deduction type within the Other Deductions on the Deduction conditions needs to be defined, and that is the one coming from the Reference data Deduction Type (table 1011) and has the CODE “OTHDED”. When this Deduction Type is defined with Deduction Method “Original”, then ALL deduction details on the As Original ledger of the OCC, within the Entry Code Sub Category “Other Deduction”, will be retroceded to the ORP when running the Retrocession Calculation order.
Example:
Retrocessionaire’s Share = 10%
| Business Ledger OCC ‘As Booking’ |
Business Ledger RP ‘As Booking |
||
|---|---|---|---|
| Entry Code | Amount | Entry Code | Amount |
| *)25 | 1.500 | 25 | 150 |
| *)ODED | 2.500 | ODED | 250 |
*) Entry Codes defined in Entry Code Sub Category Other Deduction
Calculate Commission on Accrued Premium #
Commission on Accrued Premium, if defined, is calculated whenever you run the Retrocession Calculation order. Available calculation method is;
Percent
All Premium bookings that are in accordance with the Entry Code Group selected as Premium Basis in the Deduction Conditions are multiplied with the Share of the RP and the Commission on Accrued Premium percentage. Which Entry Codes to be included in the Entry Code Groups are decided by your System Administrator.
The result of the calculation is booked on the RP’s Business Ledger As Booking with the Entry Code defined in the system parameter Entry Code Usage, Calculation Commission on Accrued Premium. Which Entry Code is selected for the calculation, is decided by your System Administrator.
Example:
Entry Code defined for Calculation Commission on Accrued Premium = ‘CACP’,
Commission on Accrued Premium = 4%, Retrocessionaire’s Share = 10%
| Business Ledger OCC ‘As Booking’ |
Business Ledger RP ‘As Booking |
||
|---|---|---|---|
| Entry Code | Amount | Entry Code | Amount |
| *) 10 | 50.000 | 10 | 5.000 |
| *) PREM | 200.000 | PREM | 20.000 |
| CACP **) | **) 1.000 |
*) Entry Code in Entry Code Sub Category Premium.The Premium Basis is dependent on the definition of the selected Entry Code Group. Refer to Entry Code Group Category Subject Premium Income, Proportional_. (In this example;_ 10 _and_ PREM_)._
**) Entry Code in Entry Code Sub Category Original Deduction Reserve. Note this is a Reserve Entry Code Sub Category which is not affecting the liquid balance.
Calculate Service Fee on Accrued Premium #
Service Fee on Accrued Premium, if defined, is calculated whenever you run the Retrocession Calculation order. Available calculation method is;
Percent
All Premium bookings that are in accordance with the Entry Code Group selected as Premium Basis in the Deduction Conditions are multiplied with the Share of the RP and the Service Fee on Accrued Premium percentage. Which Entry Codes to be included in the Entry Code Groups are decided by your System Administrator.
The result of the calculation is booked on the RP’s Business Ledger As Booking with the Entry Code defined in the system parameter Entry Code Usage, Calculation Service Fee on Accrued Premium. Which Entry Code is selected for the calculation, is decided by your System Administrator.
Example:
Entry Code defined for Calculation Service Fee on Accrued Premium = ‘SFAP’,
Service Fee on Accrued Premium = 4%, Retrocessionaire’s Share = 10%
| Business Ledger OCC ‘As Booking’ |
Business Ledger RP ‘As Booking |
||
|---|---|---|---|
| Entry Code | Amount | Entry Code | Amount |
| *) 10 | 50.000 | 10 | 5.000 |
| *) PREM | 200.000 | PREM | 20.000 |
| SFAP **) | **) 1.000 |
*) Entry Code in Entry Code Sub Category Premium.The Premium Basis is dependent on the definition of the selected Entry Code Group. Refer to Entry Code Group Category Subject Premium Income, Proportional_. (In this example;_ 10 _and_ PREM_)._
**) Entry Code in Entry Code Sub Category Original Deduction Reserve. Note this is a Reserve Entry Code Sub Category which is not affecting the liquid balance.
Calculate Service Fee on Accrued Reinstatement Premium #
Service Fee on Accrued Reinstatement Premium, if defined, is calculated whenever you run the Retrocession Calculation order. Available calculation method is;
Percent
All Premium bookings that are in accordance with the Entry Code Group selected as Premium Basis in the Deduction Conditions are multiplied with the Share of the RP and the Service Fee on Accrued Reinstatement Premium percentage. Which Entry Codes to be included in the Entry Code Groups are decided by your System Administrator.
The result of the calculation is booked on the RP’s Business Ledger As Booking with the Entry Code defined in the system parameter Entry Code Usage, Calculation Service Fee on Accrued Reinstatement Premium. Which Entry Code is selected for the calculation, is decided by your System Administrator.
Example:
Entry Code defined for Calculation Service Fee on Accrued Reinstatement Premium = ‘SFAR’,
Service Fee on Accrued Reinstatement Premium= 4%, Retrocessionaire’s Share = 10%
| Business Ledger OCC ‘As Booking’ |
Business Ledger RP ‘As Booking |
||
|---|---|---|---|
| Entry Code | Amount | Entry Code | Amount |
| *) 10 | 50.000 | 10 | 5.000 |
| *) PREM | 200.000 | PREM | 20.000 |
| SFAR **) | **) 1.000 |
*) Entry Code in Entry Code Sub Category Premium.
The Premium Basis is dependent on the definition of the selected Entry Code Group. Refer to Entry Code Group Category Subject Premium Income, Proportional_. (In this example;_ 10 _and_ PREM_)._
**) Entry Code in Entry Code Sub Category Original Deduction Reserve. Note this is a Reserve Entry Code Sub Category which is not affecting the liquid balance.
Additional OR fee 1 #
Additional OR fee 1, if defined, is calculated whenever you run the Retrocession Calculation order. Available calculation method is;
Percent
All Premium bookings that are in accordance with the Entry Code Group selected as Premium Basis in the Deduction Conditions are multiplied with the Share of the RP and the Additional OR fee 1 percentage. Which Entry Codes to be included in the Entry Code Groups are decided by your System Administrator.
The result of the calculation is booked on the RP’s Business Ledger As Booking with the Entry Code defined in the system parameter Entry Code Usage, Calculation Additional OR fee 1. Which Entry Code is selected for the calculation, is decided by your System Administrator.
Example:
Entry Code defined for Calculation Additional OR fee 1 = ‘AOF1’,
Additional OR fee 1 = 4%, Retrocessionaire’s Share = 10%
| Business Ledger OCC ‘As Booking’ |
Business Ledger RP ‘As Booking |
||
|---|---|---|---|
| Entry Code | Amount | Entry Code | Amount |
| *) 10 | 50.000 | 10 | 5.000 |
| *) PREM | 200.000 | PREM | 20.000 |
| AOF1 **) | **) 1.000 |
*) Entry Code in Entry Code Sub Category Premium.
The Premium Basis is dependent on the definition of the selected Entry Code Group. Refer to Entry ode Group Category Subject Premium Income, Proportional_. (In this example;_ 10 _and_ PREM_)._
**) Entry Code in Entry Code Sub Category Overriding Commission.
Additional OR fee 2 #
Additional OR fee 2, if defined, is calculated whenever you run the Retrocession Calculation order. Available calculation method is;
Percent
All Premium bookings that are in accordance with the Entry Code Group selected as Premium Basis in the Deduction Conditions are multiplied with the Share of the RP and the Additional OR fee 2 percentage. Which Entry Codes to be included in the Entry Code Groups are decided by your System Administrator.
The result of the calculation is booked on the RP’s Business Ledger As Booking with the Entry Code defined in the system parameter Entry Code Usage, Calculation Additional OR fee 2. Which Entry Code is selected for the calculation, is decided by your System Administrator.
Example:
Entry Code defined for Calculation Additional OR fee 1 = ‘AOF2’,
Additional OR fee 2 = 4%, Retrocessionaire’s Share = 10%
| Business Ledger OCC ‘As Booking’ |
Business Ledger RP ‘As Booking |
||
|---|---|---|---|
| Entry Code | Amount | Entry Code | Amount |
| *) 10 | 50.000 | 10 | 5.000 |
| *) PREM | 200.000 | PREM | 20.000 |
| AOF2 **) | **) 1.000 |
*) Entry Code in Entry Code Sub Category Premium. The Premium Basis is dependent on the definition of the selected Entry Code Group. Refer to Entry Code Group Category Subject Premium Income, Proportional. (In this example; 10 and PREM).
**) Entry Code in Entry Code Sub Category Overriding Commission.
Additional OR Fee UPR #
Additional OR Fee UPR, if defined, is calculated whenever you run the Retrocession Estimation Calculation order. Available calculation method is;
Percent
All Unearned Premium bookings that are in accordance with the Entry Code Group selected as Premium Basis in the Deduction Conditions are multiplied with the Share of the ORP and the Additional OR Fee UPR percentage. Which Entry Codes to be included in the Entry Code Groups are decided by your System Administrator.
The result of the calculation is booked on the ORP’s Business Ledger As Booking (flagged ‘Estimates’) with the Entry Code defined in the system parameter Accounting/Entry Code/Accounting Function Retrocession Estimation Accounting Proportional Treaty, Calculation Additional OR Fee UPR. Which Entry Code is selected for the calculation, is decided by your System Administrator, but must be within Entry Code Sub Category Original Premium Reserve.
Example:
Entry Code defined for Calculation Additional OR Fee UPR = ‘ORFU’,
Additional OR Fee UPR = 5%,
Retrocessionaire’s Share = 10%
| Business Ledger OCC ‘As Booking’ |
Business Ledger RP ‘As Booking |
||
|---|---|---|---|
| Entry Code | Amount | Entry Code | Amount |
| *) 98 | 50.000 | 98 | 5.000 |
| ORFU **) | **) -250 |
*) Entry Code in Entry Code Sub Category Unearned Premium Reserve. The Premium Basis is dependent on the definition of the selected Entry Code Group. Refer to Entry Code Group Category Subject Premium Income, Proportional. (In this example; 98 Unearned Premium)
**) Entry Code in Entry Code Sub Category Reserve, Entry Code Sub Category Original Premium Reserve
(Stepped) Sliding Scale Commission #
The (Stepped) Sliding Scale Commission is dependent of the result; a high commission is given to the Retrocessionaire when the result of the treaty is good and a low commission if the result is bad.
The (Stepped) Sliding Scale Commission is calculated as a total and is shown in the (Stepped) Sliding Scale Commission Statement. The value entered in the Calculation Frequency field in the Deduction Conditions decides when the (Stepped) Sliding Scale is calculated. On the Business Ledger the (Stepped) Sliding Scale is booked as an adjustment to the Provisional Commission, which is calculated in each Account. The Commission rate used in the calculation is depending on a Loss Ratio. The Loss Ratio is depending on the definition of the fields Premium and Loss in Loss Ratio Definition section in the Deduction Condition. Also, if defined in the condition, credit/deficit from previous Insured Period(s) is carried forward. (For further information about definitions of Deduction Conditions, see the chapter ‘Handle Deduction Conditions’)
If bookings are made in different currencies, bookings for all currencies are converted into Main- or Base currency. The conversion depends on the value selected in the field Profit/Loss Currency in the Administration condition/Currencies tab. The overall (Stepped) Sliding Scale Commission amount is booked in this currency only. (For further information, see the chapter ‘Handle Administration Conditions’.)
Which details are included in the calculation of the Stepped-/Sliding Scale Commission may be inspected from the ORP Business Ledger, menu option View Stepped-/ Sliding Scale Commission Details.
Calculate Provisional Commission #
Provisional Commission, if defined, is calculated whenever you run the Retrocession Calculation order. Available calculation methods are;
None
No calculation of the Provisional Commission is performed.
Original
All bookings with Entry Codes within the Entry Code Sub Category Original Commission are multiplied with the Share of the Retrocessionaire Participations (RP). The result of the calculation is booked on the RP’s Business Ledger As Booking with the original Entry Code(s).
Example
Retrocessionaire’s Share = 10%
| Business Ledger OCC ‘As Booking’ |
Business Ledger RP ‘As Booking |
||
|---|---|---|---|
| Entry Code | Amount | Entry Code | Amount |
| *)20P | 2.000 | 20P | 200 |
| *)PCOM | 5.000 | PCOM | 500 |
*) Entry Codes defined in Entry Code Sub Category Original Commission
Percent
All Premium bookings for the current Accounting Year of the Insured Period that are in accordance with the Entry Code Group selected as Premium Basis in the Deduction Conditions are multiplied with the Provisional Commission percentage and the Share of the RP. Which Entry Codes to be included in the Entry Code Groups are decided by your System Administrator.
The result of the calculation is booked on the RP’s Business Ledger As Booking with the Entry Code defined in the system parameter Entry Code Usage, Calculation ‘Provisional Commission’. Which Entry Code is selected for the calculation, is decided by your System Administrator.
Example:
Entry Code defined for Calculation Provisional Commission = ‘20P’
Provisional Commission = 20%
Retrocessionaire’s Share = 10%
| Business Ledger OCC ‘As Booking’ |
Business Ledger RP ‘As Booking’ |
||
|---|---|---|---|
| Entry Code Premium |
Amount | Entry Code | Amount |
| *) 10 | 50.000 | 10 | 5.000 |
| *) PREM | 200.000 | PREM | 20.000 |
| 20P | 5.000 |
*) Entry Codes in Entry Code Sub Category Premium.
) The Premium Basis is dependent on the selected Group and the definition of the Entry Code Group. Refer toEntry Code Group Category ‘Subject Premium Income**, **Proportional**. (In this example; **10** and **PREM**).
Loss Ratio #
To find the (Stepped) Sliding Scale Commission rate to be used in the calculation, the Loss Ratio has to be calculated. The Loss Ratio is found by dividing the Loss by the Premium and expressed as a percentage (refer to fields Premium and Loss in section ‘Loss Ratio Definition’ on Deduction Condition). The Premium and Loss are cumulated figures and are calculated per Insured Period.
The Entry Codes to be included in the Premium and Loss are according to the definition of the Entry Code Groups selected. (Refer to the Reference Item/Entry Code Group Category Premium Basis for Loss Ratio and Loss Basis for Loss Ratio). If ‘Include Reserve’ for Premium and Loss is selected, the bookings with Entry Codes within the Entry Code Sub Category Original Premium Reserve and Original Loss Reserve are included in the calculation of the Loss Ratio. (Refer to Entry Code Maintenance, Entry Code Category Reserve).
Note! If the Entry Codes within the Entry Code Sub Category Original Premium Reserve and_Original Loss Reserve_ are included in the _Premium-_ and _Loss_ Groups for _Loss Ratio_ Definition and, in addition, the ‘Include Reserve’ is selected, the _Original Premium Reserve_ and _Original Loss Reserve_ are included twice in the _Loss Ratio_ calculation.
Example:
Group selected for Premium includes Entry Codes; ‘10’, ‘15’, ‘85’
Group selected for Loss includes Entry Codes; ‘30’, ‘87’
Bookings on the Retrocessionaire Participation Business Ledger,
| Entry Code | Entry Code Description | Amount |
|---|---|---|
| 10 | Written Premium | 120.000 |
| 15 | Excess of Loss Premium | 10.000 |
| *)81 | Original Premium Reserve | 15.000 |
| 85 | Additional Premium Reserve | 5.000 |
| 30 | Paid Losses | 50.000 |
| *)83 | Original Loss Reserve | 10.000 |
| 87 | Additional Loss Reserve | 15.000 |
*) Reserve in Entry Code Sub Category Original Premium Reserve/Original Loss Reserve.
-
‘Include Reserve’ is not selected on the condition;
Loss Ratio:
(50.000 + 15.000) / (120.000 - 10.000 - 5.000) * 100= 61,90% -
‘Include Reserve’ is selected on the condition;
Loss Ratio:
(50.000 + 10.000 + 15.000) / (120.000 - 10.000 - 15.000 - 5.000) * 100= 83,33%
Calculate (Stepped) Sliding Scale Commission Amount #
Stepped Sliding Scale Commission Rate
The Stepped Sliding Scale Commission Rate used in the calculation is found in the Stepped Sliding Scale table entered on the Deduction condition;
- If the Loss Ratio for Stepped Sliding Scale Commission is higher than or equal to the Max Loss Ratio from the table, then the Minimum Commission Rate is used.
- If the Loss Ratio for Stepped Sliding Scale Commission is higher than the Min Loss Ratio and less than the Max Loss Ratio from the table, then the Commission Rate defined in the scale for the calculated Loss Ratio is used.
- If the Loss Ratio for Stepped Sliding Scale Commission is equal to or less than Min Loss Ratio from the table, then the Max Commission Rate is used.
(For further information about Loss ratio and Stepped Sliding Scale Commission definition, see the chapter ‘Handle Deduction Condition’ in the User’s Guide.)
Sliding Scale Commission Rate
The Sliding Scale Commission Rate used in the calculation is a rate calculated accurately according to the definition entered in Sliding Scale/Loss Ratio section on the Deduction condition;
- If the Loss Ratio for Sliding Scale Commission is higher than or equal to the Max Loss Ratio from the table, then the Minimum Commission Rate is used.
- If the Loss Ratio for Sliding Scale Commission is higher than the Min Loss Ratio and less than the Max Loss Ratio from the table, then an accurate rate is calculated; Max Loss Ratio less Loss Ratio for Sliding Scale Commission multiplied with Max Commission percent - less Min Commission percent divided by Max Loss Ratio less Min Loss Ratio. The result is then added to the Min Commission percent.
- If the Loss Ratio for Stepped Sliding Scale Commission is equal to or less than Min Loss Ratio from the table, then the Max Commission Rate is used.
(Refer to Sliding Scale Commission - formulas)
Final (Stepped) Sliding Scale Commission Amount
The accumulated Premium for all Accounting Years of the Insured Period is multiplied with the (Stepped) Sliding Scale Commission Rate and the Share of the Retrocessionaire’s Participation (RP). The Premium basis is according to definition of the selected Entry Code Group in the Calculation Basis on Deduction Condition.
Previously Paid Commission Amount
The Previously Paid Commission Amount is the Provisional Commission Amount prior Accounting Year(s) + (Stepped) Sliding Scale Commission Amount prior Accounting Year(s)
Calculate (Stepped) Sliding Scale Commission Amount Current Accounting Year
The Final (Stepped) Sliding Scale Commission Amount less Previously Paid Commission Amount less Provisional Commission Amount Current Accounting Year is the Amount to be booked with the Entry Code for the (Stepped) Sliding Scale Commission. Which Entry Code is selected for the calculation, is decided by your System Administrator.
Losses Carried Forward - Credit/Deficit
If defined on the Deduction Condition, the incurred losses in excess of a maximum loss ratio/below a minimum loss ratio from current Insured Period can be added/deducted from the incurred losses of the following Insured Period(s).
Example:
Conditions;
| Account Frequency | Yearly |
|---|---|
| First Calculation after; | 1 year |
| Provisional Commission; | 20% |
| Losses Carried Forward - Credit; | 2 years |
| Losses Carried Forward - Deficit; | 2 years |
| Min Loss Ratio | Max Loss Ratio | Commission |
|---|---|---|
| 80,00 | 10000,00 | 18,00 |
| 75,00 | 79,99 | 20,00 |
| 70,00 | 74,99 | 22,00 |
| 65,00 | 69,99 | 24,00 |
| 60,00 | 64,99 | 26,00 |
| 55,00 | 59,99 | 28,00 |
| 0,00 | 54,99 | 30,00 |
- Outward Cedent’s Contract is on Clean Cut basis
| Accounting Year ‘X’ | ||
|---|---|---|
| Insured Period | ‘X’ | |
| Written Premium Earned Premium |
105 000,00 100 000,00 |
|
| Provisional Commission current accounting year | 105 000 * 20% = 21 000,00 | * |
| Incurred Loss Loss in XS of max from prev. IP Loss below min from prev. IP Incurred Loss for Sl. Sc. Comm |
50 000,00 0,00 0,00 50 000,00 |
|
| Loss Ratio Loss Ratio for Sl. Sc. Comm Sliding Scale Commission Rate |
(50’/100’)*100 = 50,00 (50’/100’)*100 = 50,00 30,00 |
% % % |
| Final Sliding Scale Commission Previously Paid Commission Sliding Scale Commission |
105 000 * 30% = 31 500,00 21 000 + 0 = 21 000,00 10 500,00 |
* |
| Incurred losses to be carried forward - in XS of max (>0) - below minimum (<0) |
105 000,00 100 000,00 50’- (100’ * 80%) = 0,00 50’- (100’ * 55%) = -5 000,00 |
Bookings on RP Business Ledger As Booking Insured Period ‘X’ /Accounting Year ‘X’
*) Provisional Commission 21 000,00
*) (Stepped) Sliding Scale Commission 10 500,00
| Accounting Year ‘X+1’ | ||
|---|---|---|
| Insured Period | ‘X+1’ | |
| Written Premium Earned Premium |
150 000,00 149 000,00 |
|
| Provisional Commission current accounting year | 150 000 * 20% = 30 000,00 | * |
| **Incurred Loss Loss in XS of max from prev. IP Loss below min from prev. IP Incurred Loss for Sl. Sc. Comm |
85 000,00 From IP ‘X’ 0,00 From IP ‘X’ 5 000,00 80 000,00 |
|
| Loss Ratio Loss Ratio for Sl. Sc. Comm Sliding Scale Commission Rate |
(85’/149’)*100 = 57,05 (80’/149’)*100 = 53,69 30,00 |
% % % |
| Final Sliding Scale Commission Previously Paid Commission Sliding Scale Commission |
150 000 * 30% = 45 000,00 30 000 + 0 = 30 000,00 15 000,00 |
* |
| Incurred losses to be carried forward in XS of max (>0) below minimum (<0) |
85' - (149' * 80%) = 0,00 85' - (149' * 55%) = 0,00 |
Bookings on RP Business Ledger As Booking Insured Period’X+1'/Accounting Year ‘X+1’
*) Provisional Commission 30 000,00
*) Stepped Sliding Scale Commission15 000,00
Calculate Stepped-/Sliding Scale Commission when Credit/Deficit Carried Forward based on Quota Share Percentage
It is possible to calculate Stepped-/Sliding Scale Commission with Credit/Deficit Carried Forward adjusted by the Quota Share percentage defined for the current Insured Period compared to the Quota Share percentage defined for the previous Insured Period (from which the credit/deficit is to be carried forward). This is possible by selecting the field ‘Calculate based on Quota Share Percentage’ on the OCC, Business tab, Accounting Info. When this option is selected, the Credit/Deficit Carried Forward amount from previous Insured Period is multiplied with the Quota Share Percent registered for this Insured Period divided by the Quota Share Percent for the current Insured Period (Refer to Premium/Limit Conditions, Limit ‘Quota Share Percent’).
Example
Quota Share Percent Insured Period ‘X’ = 25% and Insured Period ‘X+1’ = 15%
Referring to the above example, ‘Loss below min from prev. IP’ amount 5.000 would have been adjusted according to Quota Share Percent and shown as 3.000;
5.000 x 15/25 = 3.000
Note! Calculate Credit/Deficit Carried Forward based on Quota Share percentage is available only when Proportional Treaty OCC is with Type of Participation ‘Quota Share’ and Premium/Claim Accounting Basis is ‘Clean Cut’.
- Outward Cedent’s Contract is on Run Off basis
| Accounting Year ‘X’ | |||
|---|---|---|---|
| Insured Period | ‘X+1’ | ‘X’ | |
| Written Premium Earned Premium |
105 000,00 100 000,00 |
||
| Provisional Commission current accounting year | 105 000 * 20% = 21 000,00 | ||
| Incurred Loss Loss in XS of max from …prev. IP Loss below min from …prev. IP Incurred Loss for Sl.Sc …Comm |
50 000,00 0,00 0,00 50 000,00 |
* | |
| Loss Ratio Loss Ratio for Sl. Sc. …Comm .Sliding Scale Comm Rate |
(50'/100')*100 = 50,00 (50'/100')*100 = 50,00 30,00 |
||
| Final Sliding Scale Comm Previously Paid Comm Sliding Scale Comm |
105 000 * 30% = 31 500,00 21 000 + 0 = 21 000,00 10 500,00 |
% | |
| Incurred losses to be carried forward - in XS of max (>0) - below minimum (<0) |
50'-(100'*80%)= 0,00 50'-(100'*55%)= -5.000,00 |
% % |
Bookings on RP Business Ledger As Booking Insured Period ‘X’ /Accounting Year ‘X’
*) Provisional Commission21 000,00
*) (Stepped) Sliding Scale Commission10 500,00
| Accounting Year ‘X+1’ | |||
|---|---|---|---|
| Insured Period | ‘X+1’ | ‘X’ | |
| Written Premium Earned Premium |
150 000,00 149 000,00 |
140 000,00 130 000,00 |
|
| Prov. Comm current …AC/YR | 150' * 20% = 30 000,00 | 35' * 20% = 7 000,00 | * |
| Incurred Loss Loss in XS of max prev IP Loss below min prev. IP Incurred Loss for…Sl. Sc.Comm |
85 000,00 From IP ‘X’ 6 000,00 From IP ‘X’ 0,00 91 000,00 |
110 000,00 0,00 0,00 110 000,00 |
|
| Loss Ratio Loss Ratio for Sl. Sc. …Comm Sliding Scale Comm Rate |
(85'/149')*100 = 57,05 (91'/149')*100 = 61,07 26,00 |
(110'/130') * 100 = 84,62 (110'/130') * 100 = 84,62 18,00 |
% % % |
| Final Sliding Scale Comm Previously Paid Comm Sliding Scale Comm |
150' * 26% = 39 000,00 30' + 0 = 30 000,00 9 000,00 |
140' * 18% = 25 200,00 21'+10 500+ 7' = 38 500,00 -13 300,00 |
* |
| Incurred losses to be carried forward - in XS of max (>0) - below minimum (<0) |
85'-(149' * 80%)=0,00 85'-(149' * 55%)=0,00 |
110'-(130'*80%) =6 000,00 110'-(130'*55%) = 0,00 |
Bookings on RP Business Ledger As Booking Insured Period ‘X’ /Accounting Year ‘X+1’
*) Provisional Commission 7 000,00
*) (Stepped)Sliding Scale Commission- 13 300,00
Bookings on RP Business Ledger As Booking Insured Period ‘X+1’ /Accounting Year ‘X+1’
*) Provisional Commission 30 000,00
*) (Stepped) Sliding Scale Commission 9 000,00
(Stepped) Sliding Scale Commission - formulas;
| Abbreviations; | |
|---|---|
| Insured Period | IP |
| Earned Premium | EP |
| Loss Ratio | LR |
| Incurred Loss | IL |
Provisional Commission Amount Current Accounting Year
A1.0 Original Commission * Share
A1.1 Premium * Commission Percent * Share
Incurred Loss Carried Forward From Previous Insured Periods
A2.0 IL IP ‘X’ - (EP IP ‘X’ * Max LR IP ‘X’) > 0
A2.1 IL IP ‘X’ - (EP IP ‘X’ * Min LR IP ‘X’) < 0
Loss Ratio for (Stepped) Sliding Scale Commission
A3.0((IL accumulated current IP + A2.0 + A2.1)/ EP accumulated current IP) * 100
If Stepped Sliding Scale Commission is defined;
Stepped Sliding Scale Commission Rate
A4.0 If A3.0>=Max LR >> Minimum Commission Percent
A4.1 If Min LR< A3.0<Max LR >>
Find Commission Percentage in Stepped Sliding Scale/Loss Ratio table
A4.2 If A3.0=<Min LR >> Max Commission Percent
If Sliding Scale is defined;
Sliding Scale Commission Rate
A4.0 If A3.0>=Max LR >> Minimum Commission Percent
A4.1 If Min LR< A3.0<Max LR >>
(Max LR - A3.0) * ((Max Commission % - Min Commission %) /
(Max LR - Min LR)) + Min Commission %
A4.2 If A3.0=<Min LR >> Max Commission Percent
Final (Stepped) Sliding Scale Commission Amount
A5.0 Premium accumulated all Acct Yrs * (Stepped) Sliding Scale Comm Rate (A4.0/A4.1/A4.2) * Share
Previously Paid Commission Amount
A6.0 Provisional Commission Amount prior Accounting Years + (Stepped) Sliding Scale Commission Amount prior Accounting Years
Stepped Sliding Scale Comm Amount Current Accounting Year
A7.0 A5.0 - A6.0 - A1.0/A1.1
Incurred Losses to be Carried Forward to Future Insured Periods
A8.0 IL current IP - (EP current IP * Max LR current IP) > 0
A8.1 IL current IP - (EP current IP * Min LR current IP) < 0
Calculate (Stepped) Sliding Scale Commission on a Bouquet Calculation Group #
A Retrocessionaire may have a share in different Outward Cedent’s Contracts (OCCs). If these have Sliding Scale Commission or Stepped Sliding Scale Commission defined, it is possible to calculate (Stepped) Sliding Scale Commission on an overall basis, across several OCCs. (Stepped) Sliding Scale Commission will then be booked based on the overall Loss Ratio for this Retrocessionaire across all included OCCs.
Calculate (Stepped) Sliding Scale Commission on a Bouquet Calculation Group:
- On each OCC, define Sliding Scale Commission conditions as described above
- Create a Bouquet Calculation Group and include all OCCs for which you want to calculate (Stepped) Sliding Scale Commission on an overall basis
- When Sliding Scale Commission is due to be calculated, e.g. at the end of an Accounting Year, you should first run ordinary Retrocession Calculation orders and Retrocession Account orders to calculate and book all other figures to the Retrocessionaires' ledgers. These orders should be run without Sliding Scale Commission selected in the Orders.
- When all figures being basis for the (Stepped) Sliding Scale Commission calculation are booked on the Retrocessionaires' ledgers, create a Retrocession Calculation Order Group. On the order, select Acc. Sliding Scale under Items Included. All other fields under Items Included are cleared and disabled.
- From the Menu select Create Orders to create the individual orders for each OCC.
- Run the Order. System will perform Bouquet calculation of (Stepped) Sliding Scale Commission as described below. No other calculations or bookings than the Bouquet Sliding Scale Commission will be performed when Acc. Sliding Scale is selected on the order.
The following should be noted regarding the Bouquet calculation of (Stepped) Sliding Scale Commission:
- The system will add together the Premium and Loss amounts for each Retrocessionaire on the various OCCs, and calculate an overall Loss Ratio. This loss ratio will be used to calculate (Stepped) Sliding Scale Commission to be booked for this Retrocessionaire on each OCC.
- The system will only calculate an overall Loss Ratio if the accounts are to be sent to the same ‘Receiver’. By the term ‘Receiver’ is here meant the Partner with the Payment task on each Retrocessionaire’s Participation. If a Retrocessionaire has a share in different OCCs but these are placed through different brokers, and brokers has Payment task, an overall Loss Ratio for this Retrocessionaire will only be calculated for the OCCs with the same broker.
- Sliding Scale / Stepped Sliding Scale Commission are booked in Main or Base currency, dependent on the settings on the Administration conditions. An overall Loss Ratio will only be calculated for OCCs with the same Main or Base currency.
- The Bouquet calculation of (Stepped) Sliding Scale Commission is based on the assumption that a Retrocessionaire has same (Stepped) Sliding Scale Commission conditions on the various OCCs. If this is not the case, a random condition will be used to calculate the overall Loss Ratio.
Example:
Stepped Sliding Scale Commission has been defined with the following steps on all OCCs / RPs included in the calculation.
| Min Loss Ratio | Max Loss Ratio | Commission % |
|---|---|---|
| 90,00 | 10.000,00 | 20 |
| 80,00 | 89,99 | 25 |
| 70,00 | 79,99 | 30 |
| 60,00 | 69,99 | 35 |
| 0,00 | 59,99 | 40 |
| OCC | RP | Broker (with payment task) | Premium booked on RP | Loss booked on RP | Sliding Scale Comm. amount | |
|---|---|---|---|---|---|---|
| OCC1 | RP1 | Broker a | -16.000 | 10.000 | 4.800 | *) |
| RP2 | Broker a | -24.000 | 15.000 | 8.400 | ***) | |
| RP3 | -40.000 | 25.000 | 10.000 | ****) | ||
| OCC2 | RP1 | Broker a | -15.000 | 12.000 | 4.500 | *) |
| RP2 | Broker a | -5.000 | 4.000 | 1.750 | ***) | |
| RP3 | -30.000 | 24.000 | 9.000 | ****) | ||
| OCC3 | RP3 | -40.000 | 50.000 | 10.000 | ****) | |
| OCC4 | RP1 | -40.000 | 20.000 | 16.000 | **) | |
| RP2 | Broker a | -20.000 | 12.500 | 7.000 | ***) | |
| RP3 | -20.000 | 12.500 | 5.000 | ****) |
*) Loss Ratio = (10.000 + 12.000) / (16.000 + 15.000) = 70,97% => gives Commission Rate = 30%
**) Loss Ratio = 20.000 / 40.000 = 50% => gives Commission Rate = 40%. For RP1 the receiver is different on OCC4 than on OCC1 and OCC2, therefore overall Loss Ratio is only calculated for OCC1 and OCC2.
***) Loss Ratio = (15.000 + 4.000 + 12.500) / (24.000 + 5.000 + 20.000) = 64,29% => gives Commission Rate = 35%
****) Loss Ratio = (25.000 + 24.000 + 50.000 + 12,500) / (40.000 + 30.000 + 40.000 + 20.000) = 85,77% => gives Commission Rate = 25%
Stepped-/Sliding Scale Commission - Bouquet Calculation Group when order marked as ‘Batch Template’ #
When the Retrocession Calculation and the Retrocession Account Group Orders are marked as ‘Batch Template’ these orders can be used as Templates - which will simplify the process of running the various Accounts;
Create the following Retrocession Group Orders and select the field ‘Batch Template’;
Calculation Group Order with field ‘Sliding Scale’ = deselected
Calculation Group Order with field ‘Acc. Sliding Scale’ = selected
Account Group Order
- Select field ‘Close Worksheet’ for all Group Orders
- Select ‘Request Scheduled Job Template’ from Group Orders
- From ‘Job Template’ select Priority and Desired Scheduler etc. Note that the order with the highest Priority will be run first.
- From Scheduler/Job Templates tab, mark the orders and select ‘Copy to Actual Job’. Group Orders and Single Orders are created from Templates and shown in tab ‘Pending Actual Jobs’ (Scheduler). Group Orders are also shown in the Accounting Order Monitor (SICS Workstation Desktop/Periodic Functions)
- From Scheduler select ‘Scheduling’ and ‘Process Scheduled Jobs’. Orders are run in sequence according to the Priority set on Job Template
To run the orders for the next Account, do the following; #
- From Accounting Order Monitor, select ‘Edit Group Order Template’ to select the next Booking Year/Period and Accounting Year/Period.
- From Accounting Order Monitor, select ‘Copy to Actual Jobs’ or select ‘Copy to Actual Job’ from Scheduler' to create Group Orders and Single Orders from the Templates.
- From Scheduler select ‘Scheduling’ and ‘Process Scheduled Jobs’