Willis

Premium allocation systems provide formal, yet versatile mechanisms in which insurance premiums, fees and other charges are allocated among participants in an equitable manner.

Unlike many off-the-shelf products, we will design your system in conjunction with you and build it according to your specification, incorporating the features you want.

Features:

• allocation according to some or all of the following factors with appropriate weightings:
  • exposure (payroll, vehicle numbers etc)
  • claims (value, number, forecast etc)
  • risk management factors (e.g. reward for outlay on Health and Safety improvements or allocate part of premium according to Health and Safety audit results)
  • using underwriting factors to more accurately reflect exposure
• capping premium changes from expiring levels, per class or across all classes
• differing methodologies per class, layer or when allocating fees
• ability to adjust for acquisitions/disposals
• ability to adjust for varying exchange rates
• compliance with tariff rating where applicable.

Willis services include:

1. Establishing the methodology- Through our experience in designing and developing systems for other companies, Willis can provide expert advice on the pros and cons of the options and choices available for your allocation methodology.
2. Designing the model- Complex spreadsheet technology will be used to provide the system as requested. This will be a combination of standard features and other options that may be unique to your specification.
3. Project managing the process- Information may need to be collated from many sources. This time consuming process can be project managed by Willis if required.

Why do you need a formal allocation system?

There are many advantages to a formal allocation system, particularly where full versatility enables you to continue to fully control the basis upon which your methodology is based.

Specific advantages of an effective system include:

• increased control over charges, as the factors, weightings and premium caps are chosen by you
• consistency over time, as the system can be applied and developed year on year
• improved efficiency, through avoiding costly disputes
• legal compliance, for instance with Transfer Pricing Legislation provides a legal requirement that charges to overseas subsidiaries are properly established
• risk management incentive, as participants know a good loss record or audit will be rewarded
• improved cash flow, through efficient agreement and collection of premiums (especially useful if a captive is involved)
• improved relationships with participants, as knowledge of how their charges are arrived at can increase their confidence in the process.