FAQ on Insurance Handler Functions
FAQ on Insurance Handler Functions
This note covers frequently asked questions in the Insurance Handler component.
Does the Insurance Handler support complicated insurance premium and rebate calculations?
You maintain insurance master data like validity, premium amount, and periodicity in the Collateral Management System (CMS). This insurance data is linked to the loan contract in the Account Management (AM) system by using the Compare Payment Plan for Insurance Policies report (/fsih/repl) report. This report also creates the financial conditions (premium and payment) in case the premium collection is to be managed for the contract. The validity of the financial conditions depends on the validity of the insurance link specified on the account. The Insurance Handler also manages the collection of the insurance premium and forwarding the same to the insurance vendor.
An external system must be responsible for the actual management of the insurance policies like premium calculations, cancellation of policy, etc. Thus, determination of insurance premium and tariff based on specific customer information (age, occupation, sex, etc.) and on business rules and premium rate tables should be done externally, for example, in the origination or policy management system. However, based on the external system, you can update the insurance policies in CMS by using the provided interfaces.
Banks and insurance companies have several methods to calculate rebates. While the Insurance Handler itself does not calculate rebates, the provided interfaces allow you to define specific rules for rebate calculation. Rebates can be calculated on active insurance links during payoff and cancellation.
– The account origination scenario does not create insurance conditions automatically.
– The Compare Payment Plan for Insurance Policies report (/fsih/repl) report does not allow short response times with large data volumes as it does not support parallel processing.
How do you transfer insurance amounts to the insurance tracking vendor or insurance company?
You can transfer the insurance amounts that are due or collected from customers to the insurance tracking vendor or insurance company by using the Paying Insurance Premium report (/FSIH/DISB). The system will make these transfers only if you set the “manage premiums” flag on the loan account.
This report works in a two-step process:
- a) The report first makes a posting to the handling account defined for the portfolio in the IMG Map Portfolio to Handling Account.
- b) Then transfers this amount to the account associated to the business partner defined for the portfolio in the IMG Define Portfolios for Insurance.
Once the report is executed, it updates the last execution date in the /FSIH/LINK table. During the next execution of the report, postings after this execution date will be picked up for transfer.
If you reverse the insurance postings on the loan account, the report transfers such reversals to the handling account on the posting date of the reversed payment item.
- When transferring the insurance amount to the handling account, back-value dated postings and reversals which are earlier than the last value date considered by the insurance disbursement report are not considered. Such postings must be transferred manually.
- You must manage the reconciliation between the handling account and the vendor account manually.
- The Paying Insurance Premium report (/FSIH/DISB) report does not allow short response times with large data volumes as it does not support parallel processing.
Can you assign multiple insurance policies to a single loan account?
You cannot assign multiple insurance policies to a single loan account.
We recommend that if you want to assign the same insurance policy to different accounts, manage the premiums on only one account. Otherwise, the same premium amount will be calculated several times as there are no system validations for the same.
How do you cancel an insurance policy in CMS and replicate the same into AM?
You can choose to cancel an insurance policy by using any of the following methods:
- You can set the status of the insurance policy to Inactive manually.
- a)Then execute the Insurance Rescission Order which inactivates the link on the contract.
- b) Finally execute the Compare Payment Plans for Insurance Policies report (/fsih/repl). This report will, in turn, cancel the conditions on the contract.
- Alternatively, you can set the Auto Cancel Date. If you have set the Auto Cancel Date and it is reached, you must execute the following steps:
- a) Execute the Insurance Rescission order which inactivates the link on the contract.
- b) Cancel the insurance policy in CMS by executing the Cancel Expired Insurance Policies report (fsih/cncl).
- c) Update the validity of the financial condition on the account by executing the Compare Payment Plans for Insurance Policies report (/fsih/repl).
- Another option is to define or update the Valid To Date on the insurance policy. If you update the Valid To Date, you must execute the Compare Payment Plans for Insurance Policies report (/fsih/repl). This report will update the validity of the financial condition on the account and also limit the validity of the insurance link.
– In case you extend the validity of the insurance policy in CMS, there will be no impact on the loan account even if you run the Compare Payment Plans for Insurance Policies report (/fsih/repl).
– The Cancel Expired Insurance Policies report (fsih/cncl) report does not allow short response times with large data volumes as it does not support parallel processing.
What happens to the insurance policy when a loan account is closed in the AM system?
If the insurance policy is only associated to a single loan account (the setting Insurance Policy Only Valid with Account is made), and the loan account is paid off early, cancelled or rescinded, the system automatically inactivates the insurance record in CMS.
How is renewal of insurance handled?
Renewal of insurance and subsequent adjustment of the insurance premium must be handled externally and then replicated to the CMS and AM systems.
Is there a possibility to automatically activate the insurance policy on disbursement?
Automatic activation of the insurance policy when a loan is disbursed is not possible. You must activate the insurance policy in CMS manually.
How do you handle changes to the insurance policy?
- You can transfer a list of changes made to the policies in CMS to the insurance tracking vendor or the insurance company by implementing the BAdI: Creation of Master Data Changes List.
- Relevant changes made to policies in CMS (such as premium amount) can be replicated to the AM system by executing the Compare Payment Plans for Insurance Policies report (/fsih/repl).
You can refer to the attachment for further documentation on the Insurance Handler.
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