How are Re-Instatements Treated?
If a client is paying a premium in stages and the client makes a claim, a premium re-instatement may need to be charged to the client to bring the premium payments up to date so that they completely cover the period of the claim. The amount of any additional re-instatement premium that is charged to the client is deducted from the amount of claim. Therefore, it is important that the premium re-instatement posting is linked to the claim posting and that the net of these transactions is used to determine the amount to be collected from the underwriter and then paid to the client.
The Billing Link reference is used to link the claim posting and its corresponding premium re-instatement posting. This ensures that only the net of these transactions is used for settlement.
Example Re-Instatement Processing Stages
Stage 1: Post the Claim and Premium Re-instatement
The transactions required to record the claim and the premium re-instatements are posted to Financials using Ledger Import (LIM).
Specific Pay As Paid Processing: The two separate postings to the client account are given the same Billing Link reference (link reference 1). This ensures that the net of these transactions is used to determine the allocation action processing. The two postings to the underwriter account are also given a billing link reference that is the same for both postings, but differs to the one used for the postings on the client account. The transactions with a net credit balance (based on the billing link) are withheld for payment.
| Tx Ref | Account | Claim or Reinstatement | Amount | Billing Link (Link Ref 1) | Allocation Marker | Allocation Code set for Allocation Action |
| CCC | Client | Claim | 100 CR | 1 | Withheld | Import |
| CCC | Client | Reinstatement | 10 DR | 1 | Withheld | Import |
| CCC | Underwriter | Claim | 100 DR | 2 | Not Allocated | Releasing Collectable |
| CCC | Underwriter | Reinstatement | 10 CR | 2 | Not Allocated | Releasing Collectable |