300107573 - Record Written, Earned and Unearned Premium Figures (Functional Specification)

300107573 - Record Written, Earned and Unearned Premium Figures (Functional Specification)

IUG DEVELOPMENT

IRIS-ENH

Record Written, Earned and Unearned Premium Figures

IUG Ref-0407; SN-300107573

Current Location & Status

File Location / Q:\Lmd\Development\300107573-Rcd Written, Earned & UnEarned Prem-IUG\02 Specification\IUG-300107573-Wrt, Earned Prm Figures-Functional.01.doc
Document Owner / Simon Wray
Status / Authorised by Xchanging

Authorised by

Name / Authorising Role / Date / Signature
Alan Chisham / Development Project Manager / 30/7/07 / Authorised Copy on File
Daryl Yeats / Project Manager / 31/7/07 / e-mail on file
Mick Hobbs / Director / 31/7/07 / e-mail on file
John Colwell / Financial Director / 31/7/07 / e-mail on file
IRIS User Group / Client

Prepared by: Simon Wray

Project ManagerDaryl Yeats

Office:Xchanging,Endeavour Drive, Basildon, Essex SS14 3WF

Issue Date:31st July 2007

© Xchanging Global Insurance Systems Ltd. 2007

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of Xchanging Global Insurance Systems Limited (Xchanging).

This document contains information which is confidential and of value to Xchanging. It may be used only for the agreed purpose for which it has been provided. Written consent is required before any part is reproduced.

Trademark Information

Company, product, or brand names mentioned in this document, may be the trademarks of their owners.

Document Control

Revision History

Version / Description/Reason for Change / Date
01 / Initial Version Created (Simon Wray) / 27th July 2007

Circulation List

Name / Business Area / For Review / For Sign-off / Agreement to proceed
Alan Chisham / Development / X / X / X
Daryl Yeats / IS / X / X
Alan Starr / IS / X
Robert Atkins / IS / X
Mick Hobbs / IS / X / X / X
John Colwell / IS / X / X / X
IRIS User Group / Client / X / X

Document Purpose

This document is the Functional Specification for the IRIS User Group’s proposed development to record written, earned and unearned premium within IRIS-ENH[1]. It has been compiled in accordance with the Xchanging XPERT package Implementation Methodology.

Contents Page

1Introduction

1.1Background to Requirement

1.2Business Requirement

1.3Scope

1.4Outside Scope

1.5Assumptions and Limitations

1.6Impact Analysis

1.7Implementation

2Summary of Functional Changes

2.1System Level Earning and Movement Configuration

2.2Movement Recording Database Enhancements Detailed Functional Specifications

2.3Movement Recording Configuration Detailed Functional Specifications

2.4Movement Recording Detailed Functional Specifications

2.5Earning Calculation Database Enhancements Detailed Functional Specifications

2.6Earning Configuration Detailed Functional Specifications

2.7Written Premium and Deduction Earning Calculation Detailed Functional Specifications

2.8Closed Premium Earning Database Enhancements Detailed Functional Specifications

2.9Closed Premium Earning Calculation Detailed Functional Specifications

2.10Earned and Unearned Premium Triangulation Enquiry Detailed Functional Specifications

2.11Generic Schedule Management Utility Detailed Functional Specifications

2.12Premium Earning Pattern Functional Amendments

3Business and Functional Requirements Matrix

3.1Written Movements

3.2Earned Premium

3.3Triangulated View of Data

4Functional Summary

4.1Configuring and recording the movements of written premium amounts

4.2Configuring, calculating and recording earned premium amounts

4.3Presenting a triangulated view of the information

5System Level Earning & Movement Configuration Detailed Functional Specifications

5.1New Premium Movement And Earning Environment Settings Dialogue (FS01)

5.2Analysis Codes Configuration (FS02)

5.3Earning Premium Calculation Basis Configuration (FS03)

5.4Earning Premium Fixed Basis Configuration (FS04)

5.5Earnings Starting Underwriting Year Configuration (FS05)

5.6Earnings Master & Declaration Configuration (FS06)

6Movement Recording Database Enhancements Detailed Functional Specifications

6.1New Policy Movements Database File (FS07)

7Movement Recording Configuration Detailed Functional Specifications

7.1Premium Movement Recording Application (FS08)

7.2New Premium Movement Recording Configuration Tab (FS09)

7.3Premium Field Selection For Written Premium Movement Recording (FS10)

7.4Re-Calculation Trigger Field Configuration (FS11)

7.5Premium Movement Analysis Codes Configuration (FS12)

7.6Written Premium Movement Recording Level Configuration (FS13)

7.7Written Premium Movement Revenue Amount Code Configuration (FS14)

7.8Deduction Movement Recording Configuration (FS15)

7.9Deduction Calculation Method Configuration (FS16)

8Movement Recording Detailed Functional Specifications

8.1Calculate Initial Written Premium Movement (FS17)

8.2Record Initial Written Premium Movement (FS18)

8.3Calculate Changed Premium Movements (FS19)

8.4Flag Previous Premium Movements As Closed (FS20)

8.5Record Changed Premium Movements (FS21)

8.6Trigger Premium Movement on Re-Calculation Field Change (FS22)

8.7Trigger Premium Movement on Code Field Change (FS23)

8.8Calculate Initial Deduction Movement (FS24)

8.9Calculate Changed Deduction Movement (FS25)

8.10Flag Previous Deduction Movements As Closed (FS26)

8.11Record Deduction Movements (FS27)

8.12Trigger Closings Input Movement on Re-Calculation Field Change (FS28)

8.13Trigger Bureau Closings Premium Movement on Re-Calculation Field Change (FS29)

8.14Premium Amount Movement Enquiry (FS30)

8.15Movement Recording Fix Program (FS31)

9Earning Calculation Database Enhancements Detailed Functional Specifications

9.1New Earned Premium Database File (FS32)

9.2New ‘Earning Flag’ Code Type (FS33)

10Earning Configuration Detailed Functional Specifications

10.1Select Earning Premium Calculation Application (FS34)

10.2New Premium Earning Calculation Configuration Tab (FS35)

10.3EPI Premium Earning Field Configuration (FS36)

10.4Written Earning Premium Entry Level Configuration (FS37)

10.5Premium Earning Level Calculation Configuration (FS38)

10.6Premium Revenue Amount Code Configuration (FS39)

10.7Premium Earning Analysis Codes Configuration (FS40)

10.8Deduction Earning Configuration (FS41)

10.9Deduction Calculation Method Configuration (FS42)

11Written Premium and Deduction Earning Calculation Detailed Functional Specifications

11.1Earning Applicability (FS43)

11.2Determine Written Premium Earning Period (FS44)

11.3Calculate Initial Written Earned Premium (FS45)

11.4Record Initial Written Earning Premium (FS46)

11.5Calculate Changed Written Earning Premium (FS47)

11.6Record Changed Written Earning Premium (FS48)

11.7Calculate Initial Written Deduction Earnings (FS49)

11.8Calculate Changed Written Deduction Earnings (FS50)

11.9Record Deduction Written Earnings (FS51)

11.10Calculate Changed Written Earning Premium Periods (FS52)

12Closed Premium Earning Database Enhancements Detailed Functional Specifications

12.1New Statistics ‘Earning Calculated’ Flag (FS53)

13Closed Premium Earning Calculation Detailed Functional Specifications

13.1New Closed Earning Premium Controller Function (FS54)

13.2New Closed Earning Premium Calculator Function (FS55)

13.3Closed Premium Record Selection (FS56)

13.4Determine Closed Premium Earning Periods (FS57)

13.5Closed Premium Earning Calculation (FS58)

13.6Closed Premium Earning Record Creation (FS59)

13.7Closed Deduction Earnings Calculation (FS60)

13.8Closed Deduction Earning Record Creation (FS61)

14Earned and Unearned Premium Triangulation Enquiry Detailed Functional Specifications

14.1Earning Premium Triangulation Enquiry (FS62)

15Generic Schedule Management Utility Detailed Functional Specifications

15.1Schedule Management Utility (FS63)

15.2Screen Design

15.3Reports and Enquiries

16Acceptance Criteria

16.1Test Plan

17Costs

18Appendix

18.1Glossary

18.2Premium Earning Patterns

18.3Premium Amount Fields

18.4Policy Input ‘Main Code’ Fields

18.5Business Intelligence “Appendix 3: Earning Calculation”

18.6Written Premium Earning Example

18.7An Example of Earning Premium Calculation

18.8An Example of Changing Earning Premium Periods

18.9Full Example of Premium Movement Recording and Earning

1Introduction

1.1Background to Requirement

1.1.1Summary

The IRIS User Group has called for enhancements that will facilitate one-year accounting and GAAP reporting. To achieve this, IRIS will need to record the changes in certain premium amounts over a defined period of time. It is required that this data be summarised in a triangulated form to allow analysis by the business.

1.1.2Documentation

The Business Requirement document is located here: Q:\Lmd\Development\300107573-Rcd Written, Earned & UnEarned Prem-IUG\01 Business Requirements\IUG-300107573-Wrt, Earned Prm Figures-Requirements.02.doc.

An overview of the Premium Earning Pattern functionality, along with suggested revisions, is presented in Premium Earning Patterns (Section 18.2 page 128).

1.2Business Requirement

“There is a requirement to be able to report on Unearned/Earned premium”.

This requirement will be analysed as three related strands of development;

1. Configuring and recording the movements of written premium amounts.
2. Configuring, calculating and recording earned premium amounts.
3. Presenting a triangulated view of the information.

1.2.1Requirements

These are the Business Requirements, as detailed in Section 1.2 of the Business Requirement Document (Q:\Lmd\Development\300107573-Rcd Written, Earned & UnEarned Prem-IUG\01 Business Requirements\IUG-300107573-Wrt, Earned Prm Figures-Requirements.02.doc).

1.2.1.1Configuring and recording the movements of written premium amounts.

BR01)Initial Written Premium

BR02)Changes to Written Premium

BR03)Written Premium Exchange Rates

BR04)Written Premium Share Level

BR05)Written Premium Currency

BR06)Record Written Premium Data

BR07)Initial Written Premium Deductions

BR08)Changes to Written Premium Deductions

BR09)Written Premium Deductions Exchange Rates

BR010)Written Premium Deductions Share Level

BR011)Written Premium Deductions Currency

BR012)Record Written Premium Deductions Date

BR013)Allow Written Premium and Deduction amount Movements to be recorded at Analysis Code level

BR014)Allow Client Configuration of Analysis Codes

BR015)Trigger Movement Recording on Value Changes

BR016)Display Written Premium and Deduction Movement Amounts Enquiry

1.2.1.2Configuring, calculating and recording earned premium amounts.

BR017)Record Earned Premium

BR018)Define Level of Premium being Recorded

BR019)Earning Period

BR020)Currencies

BR021)Written Premium Exchange Rates

BR022)Closed Premium Exchange Rates

BR023)Deductions Applied

BR024)Earning Dates

BR025)Residual Earning Amount

1.2.1.3Presenting a triangulated view of the information.

BR026)Earned Premium Triangulation Enquiry

1.3Scope

The following areas fall within the scope of this enhancement:

1)The creation of written premium movement records when a risk is updated.

2)The online display of these records.

3)The calculation of earned written premium.

4)The calculation of earned closed premium.

5)The display of earned premium, deductions and claims data in a triangular form.

1.4Outside Scope

The following areas fall outside of the scope of this enhancement:

1)No aspect of Reinsurance is included - neither premium/deduction earning nor premium/deduction movement amounts will be captured for Reinsurance. Outwards risks are not included, neither are Outwards risks attached to Inwards risks

2)The calculation of potential reinstatement premium, based upon outstanding claims, is not covered.

3)No provision is made for the portfolio transfer of premiums after a Year-End.

4)Exchange rate gains and losses are not recorded as a result of system-wide changes to exchange rate. Neither are system-wide changes to exchange rates used to re-value amounts.

5)The calculation of written and closed premium/deduction earnings and written premium/deduction movements will not be recorded at the level of a policy Endorsement. As a result, the changing ofearlier policy Endorsements will not affect the calculation of written movements or written and closed earnings (the system will only ever use the latest endorsement).

6)The start date for written premium and deduction earning calculations will be the Inception Date of a policy. As a result it will not be possible (or desirable) to calculate earnings based on the dates on an individual written premium movement.

7)The IRIS iSeries application “Statistics Codes Update” will not be modified. That is, using this application to update analysis codes throughout the system will not affect currently calculated earned closed premium amounts.

8)No provision is made for a fix program to determine the earnings of written and closed amounts for existing premium and deduction data.

9)The proposed Schedule Management Utility will not include IRIS Reporting or the IRIS Review Diary, both of which have their own functionality to control and schedule tasks.

1.5Assumptions and Limitations

1)The use of the “Transaction Earning Basis Flag” (IATREB) will not govern the earning periods of Closed premium and deduction amounts – this functionality can be considered at a later date.

2)The calculation of Accounting and Base currency amounts will use the rates of exchange that are in place on the associated policy at the time of calculation. That is, written rates will be used and as a result any changes in the current system exchange rates will not be used to re-calculate booked amounts.

3)That the “Statistics Codes Update” program is not covered by this enhancement signifies that Closed premium & deduction earnings will not have their codes updated when the program is run. As a result, earnings may have different analysis codes from the Statistics records used to generate their earnings.

4)Another on-going IRIS development is the “Business Intelligence” (‘BI’) enhancement (located in the Worldview repository in Underwriting OLAP/Documentation/IRIS BI Specification -4.doc). This includes earning premium calculations. The current BI documentation has been reviewed and the mechanism within the BI documentation is in accordance with, though more basic than, the functionality contained within this functional specification. The details of the BI specification have been re-produced within Business Intelligence “Appendix 3: Earning Calculation” (Section 18.5 page 133).

5)The recording of earning premium against Masters and Declarations will be controlled at the environment level. Consequently underwriters will not be able to control earning premium differently on individual Lineslips.

1.6Impact Analysis

1)The creation of earned and unearned premium and deduction amount records within Policy Input has a potential impact upon performance. The impact would be adverse if a high number of earning records were created - for example as a result of a daily earning pattern requiring the creation or update of records for each day within a yearly period. It is the intent of the design to create summary-level records and thus prevent this situation.

1.7Implementation

Upon implementation of this enhancement, the following points are to be considered:

1)The various configuration settings have default values. These settings must be reviewed to ensure they meet the business’ post-implementation requirements.

2)These settings will be used by the Movement Recording Fix Program (FS31) (Section 8.15 page 54) when it is initially run to build premium movements for existing policies.

3)Changes to settings relating to premium movement recording after this program is run will necessitate that this fix program be re-run. Without doing so, would result in discrepancies between historic and new movement data.

4)There will be no fix program to populate the written and closed earning premium amounts for historic data.

5)A new IRIS Rule will be configured within Business Customisation to populate the Policy Year of Account field (POYOAC) from the field currently used by the business to store the Year of Account (e.g. PHUGYR or SYZMYR).

2Summary of Functional Changes

2.1System Level Earning and Movement Configuration

FS01)New Premium Movement And Earning Environment Settings Dialogue (FS01) (Section 5.1 page 20)

FS02)Analysis Codes Configuration (FS02) (Section 5.2 page 21)

FS03)Earning Premium Calculation Basis Configuration (FS03) (Section 5.3 page 22)

FS04)Earning Premium Fixed Basis Configuration (FS04) (Section 5.4 page 23)

FS05)Earnings Starting Underwriting Year Configuration (FS05) (Section 5.5 page 24)

FS06)Earnings Master & Declaration Configuration (FS06) (Section 5.6 page 24)

2.2Movement Recording Database Enhancements Detailed Functional Specifications

FS07)New Policy Movements Database File (FS07) (Section 6.1 page 25)

2.3Movement Recording Configuration Detailed Functional Specifications

FS08)Premium Movement Recording Application (FS08) (Section 7.1 page 28)

FS09)New Premium Movement Recording Configuration Tab (FS09) (Section on 7.2 page 29)

FS10)Premium Field Selection For Written Premium Movement Recording (FS10) (Section 7.3 page 30)

FS11)Re-Calculation Trigger Field Configuration (FS11) (Section 7.4 page 31)

FS12)Premium Movement Analysis Codes Configuration (FS12) (Section 7.5 page 32)

FS13)Written Premium Movement Recording Level Configuration (FS13) (Section 7.6 page 33)

FS14)Written Premium Movement Revenue Amount Code Configuration (FS14) (Section 7.7 page 34)

FS15)Deduction Movement Recording Configuration (FS15) (Section 7.8 page 35)

FS16)Deduction Calculation Method Configuration (FS16) (Section 7.9 page 35)

2.4Movement Recording Detailed Functional Specifications

FS17)Calculate Initial Written Premium Movement (FS17) (Section 8.1 page 37)

FS18)Record Initial Written Premium Movement (FS18) (Section 8.2 page 39)

FS19)Calculate Changed Premium Movements (FS19) (Section 8.3 page 40)

FS20)Flag Previous Premium Movements As Closed (FS20) (Section 8.4 page 41)

FS21)Record Changed Premium Movements (FS21) (Section 8.5 page 42)

FS22)Trigger Premium Movement on Re-Calculation Field Change (FS22) (Section 8.6 page 43)

FS23)Trigger Premium Movement on Code Field Change (FS23) (Section 8.7 page 43)

FS24)Calculate Initial Deduction Movement (FS24) (Section 8.8 page 45)

FS25)Calculate Changed Deduction Movement (FS25) (Section 8.9 page 47)

FS26)Flag Previous Deduction Movements As Closed (FS26) (Section 8.10 page 48)

FS27)Record Deduction Movements (FS27) (Section 8.11 page 49)

FS28)Trigger Closings Input Movement on Re-Calculation Field Change (FS28) (Section 8.12 page 50)

FS29)Trigger Bureau Closings Premium Movement on Re-Calculation Field Change (FS29) (Section 8.13 page 51)

FS30)Premium Amount Movement Enquiry (FS30) (Section 8.14 page 52)

FS31)Movement Recording Fix Program (FS31) (Section 8.15 page 54)

2.5Earning Calculation Database Enhancements Detailed Functional Specifications

FS32)New Earned Premium Database File (FS32) (Section 9.1 page 56)

FS33)New ‘Earning Flag’ Code Type (FS33) (Section 9.2 page 59)

2.6Earning Configuration Detailed Functional Specifications

FS34)Select Earning Premium Calculation Application (FS34) (Section 10.1 page 60)

FS35)New Premium Earning Calculation Configuration Tab (FS35) (Section 10.2 page 61)

FS36)EPI Premium Earning Field Configuration (FS36) (Section 10.3 page 62)

FS37)Written Earning Premium Entry Level Configuration (FS37) (Section 10.4 page 63)

FS38)Premium Earning Level Calculation Configuration (FS38) (Section 10.5 page 64)

FS39)Premium Revenue Amount Code Configuration (FS39) (Section 10.6 page 65)

FS40)Premium Earning Analysis Codes Configuration (FS40) (Section 10.7 page 66)

FS41)Deduction Earning Configuration (FS41) (Section 10.8 page 67)

FS42)Deduction Calculation Method Configuration (FS42) (Section 10.9 page 67)

2.7Written Premium and Deduction Earning Calculation Detailed Functional Specifications

FS43)Earning Applicability (FS43) (Section 11.1 page 69)

FS44)Determine Written Premium Earning Period (FS44) (Section 11.2 page 70)

FS45)Calculate Initial Written Earned Premium (FS45) (Section 11.3 page 72)

FS46)Record Initial Written Earning Premium (FS46) (Section 11.4 page 73)

FS47)Calculate Changed Written Earning Premium (FS47) (Section 11.5 page 75)

FS48)Record Changed Written Earning Premium (FS48) (Section 11.6 page 79)

FS49)Calculate Initial Written Deduction Earnings (FS49) (Section 11.7 page 80)

FS50)Calculate Changed Written Deduction Earnings (FS50) (Section 11.8 page 82)

FS51)Record Deduction Written Earnings (FS51) (Section 11.9 page 83)

FS52)Calculate Changed Written Earning Premium Periods (FS52) (Section 11.10 page 85)

2.8Closed Premium Earning Database Enhancements Detailed Functional Specifications

FS53)New Statistics ‘Earning Calculated’ Flag (FS53) (Section 12.1 page 86)

2.9Closed Premium Earning Calculation Detailed Functional Specifications

FS54)New Closed Earning Premium Controller Function (FS54) (Section 13.1 page 87)

FS55)New Closed Earning Premium Calculator Function (FS55) (Section 13.2 page 88)

FS56)Closed Premium Record Selection (FS56) (Section 13.3 page 89)

FS57)Determine Closed Premium Earning Periods (FS57) (Section 13.4 page 90)

FS58)Closed Premium Earning Calculation (FS58) (Section 13.5 page 91)

FS59)Closed Premium Earning Record Creation (FS59) (Section 13.6 page 93)

FS60)Closed Deduction Earnings Calculation (FS60) (Section 13.7 page 94)

FS61)Closed Deduction Earning Record Creation (FS61) (Section 13.8 page 95)

2.10Earned and Unearned Premium Triangulation Enquiry Detailed Functional Specifications

FS62)Earning Premium Triangulation Enquiry (FS62) (Section 14.1 page 96)

2.11Generic Schedule Management Utility Detailed Functional Specifications

FS63)Schedule Management Utility (FS63 (Section 15.1 page 100)

2.12Premium Earning Pattern Functional Amendments

FS64)Move Earning Period Configuration to Template Level (FS64) (Section 18.2.2.1 page 129)

FS65)Revise Template Text (FS65) (Section 18.2.2.2 page 130)

FS66)Record Percentage Decimal Places (FS66) (Section 18.2.2.3 page 130)

FS67)Revise Period Validation (FS67) (Section 18.2.2.4 page 130)

FS68)Issue Warning on Patterns Earning Beyond Expiration (FS68) (Section 18.2.2.5 page 130)

FS69)Change Earning Pattern Column Order (FS69) (Section 18.2.2.6 page 130)

3Business and Functional Requirements Matrix

3.1Written Movements

BR01 / BR02 / BR03 / BR04 / BR05 / BR06 / BR07 / BR08 / BR09 / BR10 / BR11 / BR12 / BR13 / BR14 / BR15 / BR16
FS01 /  /  /  / 
FS02 /  / 
FS07 /  /  /  /  /  /  /  /  /  /  /  /  / 
FS08 /  /  /  /  /  /  /  / 
FS09 /  /  /  /  /  /  /  / 
FS10 /  /  /  / 
FS11 / 
FS12 /  / 
FS13 /  /  /  /  /  / 
FS14 /  /  /  / 
FS15 /  / 
FS16 /  / 
FS17 /  /  /  / 
FS18 /  /  /  /  / 
FS19 /  /  /  / 
FS20 / 
FS21 /  /  /  /  / 
FS22 / 
FS23 /  / 
FS24 /  /  /  / 
FS25 /  /  /  / 
FS26 / 
FS27 /  /  /  /  /  / 
FS28 / 
FS29 / 
FS30 / 
FS31 /  /  /  /  / 

(continued next page)