MART

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MART.PNG
Name Market Setup and Sign Down
Shortcut MART
Area Policy

See the NOVUS Walkthrough Guide for further information.


Market concepts

The MART program allows clients and insurers etc. to be created with signed subscriptions and commissions, along with silent agents (plus co-broker and retained accounts in HELIX). The system uses the figures entered by the User to build two templates – one for commission bearing transactions (PM (original premium), AP (additional premium), RP (return premium) etc.), and another for non-commission bearing transactions (such as CLM (claim), REF (refund of the claim), APN (additional premium no commission), RPN (return premium no commission) etc).

With these templates – effectively a set of multiplying factors - the system can compute the amount to be paid/received by each of the ‘players’ in the market as:

Amount paid/received = distribution amount * multiplying factor.

A claim has a negative distribution amount - this reverses the sign - not the multiplying factor.


Once the market has been entered, the system automatically calculates and performs signing down to order per cent. The system also aggregates the account blocking - this creates a consolidated market. The technical entries into the IBA are templated using the consolidated market.

SIGNFIX is automatically invoked from the MART program when a market is entered that requires signing down.


NOVUS Markets
  • In a broking environment (NOVUS), clients and cedants are considered debtors whilst insurers, silent agents and reinsurers are creditors.
  • The market also establishes how much brokerage is generated.

NOVUS supports a symmetrical IBA ledger so clients and insurers are treated identically on the market i.e. they both need to total to the same percentage written line.

The system convention is to denote a client line with an asterisk ‘*’ suffix, an insurer line with a full stop/period ‘.’, and a silent agent (co-broker) with a dash ‘-’ suffix.

It is usual for there to be one client line but multiple clients are supported as long as the total placed matches the order and the total of insurer lines.


HELIX markets
  • In an insurance company environment (HELIX) debtors are ceding companies and the retained account and co-insurers are creditors.
  • For insurance companies (HELIX) where the company’s retained account is normally involved, the suffixes ‘:’ and ‘+’ apply in conjunction with using the retained account code. This code is always the same as the dataset as displayed at the top of the screen. In this example, the retained account is ‘MDL’. For inward policies, the ‘:’ suffix should be used (in conjunction with ‘MDL’ ) the client using asterisk ‘*’ suffix as above and co-insurers use the '^' suffix, whilst outward reinsurance treaties the ‘+’ suffix should be used with reinsurer line a period ‘.’.


Market Template

The market acts as a template for all the system-defined transaction types such as premiums and claims. Transactions on which adjustments may apply such as policy fees, taxes etc can be tailored using the fixed fees option within the general transaction posting. If a silent agent applies to all transaction types involving brokerage the agent can be included in the market.


Silent Agents

Silent agents are typically additional introducing intermediaries who do not participate in the market share (although they enjoy commission). They may be created on the market screen by using the ‘-‘ suffix. This allows for transaction-level accounting. If they only receive a commission on a single transaction then they should not be set up on the market.


Co-Brokers

Co-brokers can be assigned in the PARTNER program to apply to any party so that in the event of that party being used on a market the system will automatically prompt for the inclusion of the co-broker.

The user could create a new account, or select an existing account to add a co-broker too. Each time the account is used in the role of insurer, the system will prompt for the inclusion of the co-broker if one is assigned in the PARTNER record. The commission to the co-broker can be stated as a percentage of the brokerage on the market.

For example, if the brokerage is set as 10% and the arrangement with the co-broker is for 25% commission paid away, this is 25% of the 10% brokerage, but can be expressed as 25% for convenience. The system will calculate the true amount (2.5%) which will be displayed on the co-broker line.

All participating parties (partner accounts) may be entered into the market screen in any order. However, the order in which (re)insurers are entered determines the lead insurer. The first insurer is taken to be the lead. The system provides a program to rearrange the order in which insurers appear on the cover.


Notes
  1. A market must have at least one client (or retained account) and at least one (re)insurer line or retained account.
  2. Client lines may be assigned a commission percentage (over-rider), insurer lines may be assigned a brokerage percentage, a silent agent may be assigned a commission percentage. Client over-rider and silent agent commission are deducted from the brokerage.
  3. Client and insurer lines are automatically signed to the order-per cent to the precision specified on the policy record. In the event that NOVUS cannot automatically do this, an extra screen is automatically displayed to allow the user to resolve the problem.

For example, a possible setup is a market with three insurers with the same written line, e.g. 40%. If the order per cent is 100, it is not possible to sign the written lines equally to 100 as 100 is not divisible by 3. In this case, the User will need to adjust the signed line(s) to make the total exactly 100%.

There is also a field labelled ST: (stand) with options 'N' (default) or 'Y' which allows a line to stand i.e. it will not be signed down in the normal way but will be deducted from the order before the rest of the lines are signed. Lines to stand must not total more than the order %. E.G. SJC 100% ST:='N' and AES 25% ST:='Y' signs to SJC 75% and AES 25%.

In the market screen, the user enters client and insurer details (partner codes as defined in the PARTNER screen) and their written line and references on the right of the screen. The security’s default client or insurer entry (as created in the securities table) is used as the default account for IBA accounting purposes. This feature allows securities to be blocked to a common account record.

If the intention is to retain separate accounting lines for a common account, ensure that the relevant lines are given different accounting references. Templated transaction processing will take place against the blocked (consolidated) market.

For example, if the breakdown of the insurer market is two different open market insurers and five syndicates blocking to a single bureau account, the IBA ledger will comprise three insurer lines for all templated transactions plus a brokerage line if applicable.

Market Versions

On opening the market screen the program will display the latest market version number (MVN). Set the MVN to the next consecutive number to create a new market version. Dates for the effective date of that MVN cannot precede the previous MVN, reversing transactions from previous MVN does not release the market to be changed as it is used from the transactions placed and the reversals.

NOVUS Market Structures

The market structures in NOVUS and HELIX are slightly different from the way in which ‘markets’ have been looked at traditionally.

The principle behind the market is that all parties contribute to a central fund and all parties withdraw from the fund. The remaining amount in the central fund is a brokerage which then gets analysed in the nominal ledger (NL) to the brokerage account.

Let us consider a broking scenario first and premium type transactions involving commissions.


The client pays 100 premium less 5% discount. Two insurers receive 40 and 60 respectively, the first returning 15% brokerage and the second 20% brokerage. A silent agent pays nothing and takes out 2.5%

* | 100-5% | 95.00
. | 40-15% | 34.00
. | 60-20% | 48.00
- | 0-2.5% | -2.50


Note that the percentages refer to the party’s own line. In the case of the silent agent, the percentage refers to the gross amount (100).

In the right-hand column are the multiplying factors used to calculate how much of the 100 gross each party receives. For example, INS2 receives 48. The brokerage (remainder) is: 95 – 34 – 48 –2.5 = 10.5.


In a claim type transaction, the signed line (3rd column) acts as multiplying factors (adjusted for sign where appropriate). In this case, the remainder (brokerage) is 100 – 40 – 60 = 0 which is written to the IBA ledger against the brokerage (XBK) account.

For a detailed explanation, with examples of how NOVUS handles cash flow through the system, please see the NOVUS cash flow page.

Signing down of the market is done proportionally unless lines are elected to stand (flag Y). As it is mathematically impossible to sign down three carriers at 40%, each will be offered to the user in a manual override screen to control how the last decimal place is apportioned. The number of decimal places is dictated per risk on the additional information tab for the risk in the RISKNEW program.


If a risk is to be part placed on one or more facilities (linelips) then the master lineslip must already exist on the system as a facility. The sections must share one or more common section codes and will be created with a designated lead in the RISKNEW program.

To place a risk on a facility, use the MART program and select the security for the facility required from the drop-down list, state the written line amount for that risk to be placed into that facility.

NOVUS will check against the Policy Type (GID 1) and where the policy type maps to a Processing Group (GID 14) that has the transaction route set as 'T' for treaty, then the treaty commission fields are made available.

The list of applicable securities will only include those with the same division code as that of the risk being placed.

The FACILITY program shows the current position of all facilities and their running totals for premium and SI.


HELIX Market Structures

In the case of an insurance company, we can either break the market into two distinct halves – inward and outward – or structure a straight-through type of market. Taking the first, more common, scenario first, the ceding company assumes the role of ‘client’ (suffix = ‘*’) because that party is paying the premium. There may be an associated discount to that ‘client’ (ceding company) and additionally, there may be other agents taking a commission. The final player in the market is the company’s retained account. This is a special account code identical to the dataset you are running (top right-hand corner on all program screens). Let us assume this is ABC. The market becomes :-

* | 100 | 5% | 95.00
 : | 100 | 7.5(*) | -92.50
- | 0 | 2.5 | -2.50


To interpret the retained account line, the same thought patterns as in the earlier example should be adopted. In the ABC line, all the other payments to other parties are noted i.e. 5 + 2.5 and entered 7.5% accordingly to ‘balance out the brokerage’.

The net result is that there is no brokerage remaining and the amount in the retained account is 92.5.

The retained account acting as receiving premium is assigned the special ‘:’ suffix.


In configuring the outward market, the reverse applies – except that the retained account party may also benefit from the brokerage. There are a number of ways to configure the market. In this example the brokerage is left to be written to the XBK account as remainder-


+ | 100 | 0 | 100.00
- | 0 | 2.5 | -2.50
. | 40 | 5% | -38.00
. | 60 | 25% | -45.00


On a premium type outward transaction, this will leave 14.5 brokerage to be credited to the brokerage account (XBK) in the IBA ledger. Note that the retained account for outward reinsurance assumes the ‘+’ suffix.


The advantages of separating the inward from the outward business are:

- Separate divisions can be used for inward and outward.
- The number of inward transactions is usually much larger than the number of outward reinsurance transactions. Hence it makes sense to de-link inward from outward.

However, it is possible to configure a straight-through type of market such as coinsurance:-

* | 100 | 5% | 95.00
 : | 50 | 15(*) | -42.50
- | 0 | 2.5 | -2.50
. | 50 | 0 | -50.00


This structure results in no residual brokerage. On a 100 GBP premium, the client will pay GBP 95 and the other parties will receive 42.5, 2.5 and 50 as shown in the right-hand column.

The commission against the retained account(*) has been scaled to take into account that the retained account is co-insuring with COINS1 i.e. in order to create a situation of no residual brokerage, if ABC were the only recipient of premium (other than S/A) then the correct commission-in figure would be 7.5% (which would be exactly balanced by the 5% discount to the client and 2.5% commission to the silent agent.

However, as ABC is acting as a co-insurer with COINS1 then the commission-in line against ABC must be doubled to 15%.

For further information on these concepts please see market version numbers, sections, and binders and off-policies.


To create a new Market

  1. From the policy risk details screen select the view market link on the right-hand side of the screen
  2. Enter MART in the NOVUS shortcut box
  3. Complete the form.
  4. Click the commit button to save the details.
  5. Note that on the first pass through the market screen, the market must be created for 'ALL' sections. If any changes are required for individual sections, you will need to revisit the market screen for each individual section to make the necessary changes.
  6. To remove a line from the market grid, use the shift/f6 or Record/Remove record function for the highlighted line. Note it is not possible to remove a facility line; if a facility line is not required the written line must be set to zero.

The user can apply market and bureau roles to carrier participants on the market,

To update Market details

Provided there have been no transactions posted against a market, and no claims processed against a market, it is possible to update the market using the MART program

  1. From the policy risk screen select the markets tab or enter MART in the NOVUS shortcut box
  2. Enter the policy number and year and tab to Section/Type field
  3. To edit all sections, enter 'ALL' and respond to 'All Sections' pop up with Yes
  4. To edit a single section, select the appropriate section in the Section/Type field
  5. Navigate to the appropriate field(s) and make the required changes.
  6. Repeat as necessary for each security.
  7. Click the commit button to save changes


Comment: If the error message '314E: written line must be entered, must not be ZERO' is displayed, it is recommended to tab through the program, and not to click the mouse.

Takaful Markets

Takaful markets are described in more detail at Takaful markets in this Wiki.


Gross Markets

MART prevents a mixture of net/gross markets across sections and market versions on both insert and update routes. Gross markets are described in more detail at gross markets in this Wiki.


Net Markets

Net markets are described in more detail at Net markets in this Wiki.


Pools

If one of the participants on a market is a pool of insurers, consortium or sub-broking arrangement, the pool should first be set up using the POOL program. In the market screen, the pool leader is selected as the carrier, the pool written line entered and then the appropriate pool ID selected from the list of values (using the f9 function key) in the pool ID field. It is not necessary to enter each pool member separately in the market, as this is done in the POOL program.

Facility Markets

When wishing to select a facility in the MART program, the facility will only be offered where the following criteria are met:

a. where the carrier being entered is the lead carrier on the facility
b. where the division on the risk is the same as the division on the facility
c. where the inception date of the risk falls within the policy period of the facility
d. where the risk currency has been set as included currency for the Facility in the binder scope program.

Where the section types on the risk are not available on the facility, the written line will be set to zero and alternative capacity will need to be entered. MART now resets facility allocation records when resetting the market.

Version History

v 6.4.0 updated to the latest version
v 6.3.0 updated to the latest version
v 6.0.0 updated to the latest version
V 5.3.0 – Updated to latest version
V 5.1.0 – Updated to latest version.
V116R Updated screen to include N/G
V51M Account used with different suffices reduced from error to warning condition
V50M Allow brokerage percentages greater than 100% as could be used for brokerage only transactions.
v49M - First version of this form to use the new style. No other updates except the restyle.