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InsuranceDeductions

Deductions

Deduction Codes are an important part of Brokasure Enterprise (BE) because they are used to calculated nett premiums and premiums due from Clients. In addition they are used to calculate Third party shares. If fact they are used for all calculations.

The Deduction relies on knowing who the Paid By party is and who the Part To party is. The common Paid By parties are Brokerage, Client, U/w. Common Paid To parties are Brokerage, Client, Loss Adj, Survey, Thrd Pty, U/w

A full description of all the fields on the Deductions Code table can be found in the document Brokasure Enterprise Deduction Codes

The following slides contain details of how EA_QA risk EX12AAHO was set up

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Deductions

Firstly we need to know that the Deduction Codes have been set up properly. There are four important fields that we need to ensure are set the correct way. Deduction Level, Calculation Basis, Calculation Level and Effect Basis. For the demonstration we have used the following Deduction Codes.

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Dedtn Deduction Level Calculation Basis Calculation Level Effect Basis

NCD Client Allowances Original transaction gross Client Allowances YesCLD Non-tax deductions Derived transaction gross Non-tax deductions NoIPT Tax deductions Derived transaction gross Tax deductions NoBKG Non-tax deductions Derived transaction gross Non-tax deductions NoDNA Non-tax deductions Derived nett amount Non-tax deductions No

Deductions

Section 1 of our risk EX12AAHO has been set up without the DNA Deduction and will therefore be a straight forward transaction. The No Claim Discount is going to be calculated on the Original Transaction Gross premium and because this Deduction Code has been set up with the Effect Basis field ticked, this will “effect” the Derived Transaction Gross which is the next level of calculation.

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Level Sequence AmountGross Premium 1,000.00 Original Transaction Gross

1 1 NCD @ 40% -400.00Balance 600.00 Derived Transaction Gross

2 2 Client Discount @ 7.5% -45.002 1 Brokerage (Retained 15%-7.5%) -45.003 1 IPT @ 6% 36.00

Net to Insurers 546.00

Deductions

Section 2 of our risk EX12AAHO has been set up with the DNA Deduction to be applied after Client Discount (CLD) and therefore the result will be different from the normal type of calculation that you usually see.

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Level Sequence AmountGross Premium 1,000.00 Original Transaction Gross

1 1 NCD @ 40% -400.00Balance 600.00 Derived Transaction Gross

2 2 Client Discount @ 7.5% -45.00Balance 555.00

2 3 A Derived Nett Amount deduction 5.55Client Nett before IPT 560.55

2 1 Brokerage (Retained 15%-7.5%) -45.003 1 IPT @ 6% 36.00

Client Nett after IPT 596.55Net to Insurers 551.55

The Derived Nett Amount deduction is 1% of the balance immediately before the calculation takes place. Therefore in this example the Balance at that point is 555.00

Deductions

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Section 3 of our risk EX12AAHO has been set up with the DNA Deduction to be applied before Client Discount (CLD) and therefore the result will be different from the normal type of calculation that you usually see.

Level SequenceGross Premium 1,000.00 Original Transaction Gross

1 1 NCD @ 40% -400.00Balance 600.00 Derived Transaction Gross

2 2 A Derived Nett Amount deduction 6.002 3 Client Discount @ 7.5% -45.00

Client Nett Before IPT 561.002 1 Brokerage (Retained 15%-7.5%) -45.003 1 IPT @ 6% 36.00

Client Nett After IPT 597.00Net to Insurers 552.00

The Derived Nett Amount deduction is 1% of the balance immediately before the calculation takes place. Therefore in this example the Balance at that point is 600.00