Indemnity Limits Updates After a Claim

After a claim, the Sum Insured of the policy diminishes with a value corresponding to the amount paid for that loss, when the policy is not subject to an automated reinstatement of Sum Insured.

In the Coverage view, the Available Indemnity Limit contains the updated Sum Insured after a loss is paid partially or final.

The Update Indemnity Limit field is introduced to state if the indemnity limit needs to be updated from a policy after each paid claim. The default value is No.

The first time a policy is saved, unless otherwise modified by the Formula Engine or an API, the Available Indemnity Limit is equal to the Sum Insured/Indemnity Limit.

The update of the Available Indemnity Limit is triggered when at the Policy Claim Data level the following two rules apply at the same time, for a single claim:

  • The claim reserve value is 0;

  • The claim payment's value is greater than 0.

The source for this data is always FTOS_INSPA_ClaimFiles if the initial rule is validated updateSumInsuredafterClaim = True.

The Available Indemnity Limit in Core Policy Admin is equal to the Indemnity Limit in Core Claims Admin.

The Indemnity Limit consumes the recorded value limit and the risk level for the peril that has the claim file attached to it.

Indemnity Limit = MIN (Value Limit, Available Indemnity Limit).

The Available Indemnity Limit is calculated as per below:

Available Indemnity limit = Previous value for the Available Indemnity Limit - Current Indemnity Paid for the coverage.

In the remote case in which the result will be a negative value, the updated Available Indemnity Limit becomes 0. In case the claims settles a total loss, the Available Indemnity Limit becomes 0. The values of the claims fees (e.g. legal expenses, handling costs, experts costa) are not included in the process of updating the Sum Insured.

Example:

At 01.01. 2021 a policy is issued with the Sum Insured for the building being 100.000 EUR, so all the coverages and the perils for the building have a sum insured of 100.000 EUR.

The content is insured at 20.000 EUR, so all the coverages and the perils for the content have a sum insured of 20.000 EUR.

TPL is covered for 10.000 EUR. So the coverages and the perils for TPL have an Indemnity limit of 20.000 EUR.

On the 27th of February a fire ensues that affects both the building and the content. The fire does not spread or affect any neighboring areas and no individuals other than the insured’s family is affected.

One month later, the file is settled and a claim of 30.000 EUR is paid, 25.000 EUR for the building and 5.000 EUR for the content.

If an agent searches for this policy on the 28th of March, the system displays the following values :

  • Available Indemnity Limit for the Building and all subsequent coverages = 75.000 Eur;

  • Available Indemnity limit for the Content and all subsequent coverages = 15.000 Eur;

  • Available Indemnity Limit for TPL = 10.000 Eur.