Application Help SAP Insurance Analyzer 1.0 SAP Accounting for Insurance Contracts PUBLIC Document Version: 1.0 2013, May 30 Application Help SAP Insurance Analyzer 1.0 1
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Icons in Body Text Icon Meaning Caution Example Note Recommendation Syntax Additional icons are used in SAP Library documentation to help you identify different types of information at a glance. For more information, see Help on Help General Information Classes and Information Classes for Business Information Warehouse on the first page of any version of SAP Library. Typographic Conventions Type Style Example text Example text EXAMPLE TEXT Example text Example text <Example text> EXAMPLE TEXT Description Words or characters quoted from the screen. These include field names, screen titles, pushbuttons labels, menu names, menu paths, and menu options. Cross-references to other documentation. Emphasized words or phrases in body text, graphic titles, and table titles. Technical names of system objects. These include report names, program names, transaction codes, table names, and key concepts of a programming language when they are surrounded by body text, for example, SELECT and INCLUDE. Output on the screen. This includes file and directory names and their paths, messages, names of variables and parameters, source text, and names of installation, upgrade and database tools. Exact user entry. These are words or characters that you enter in the system exactly as they appear in the documentation. Variable user entry. Angle brackets indicate that you replace these words and characters with appropriate entries to make entries in the system. Keys on the keyboard, for example, F2 or ENTER. Application Help SAP Insurance Analyzer 1.0 3
Contents SAP Accounting for Insurance Contracts... 5 Foundation Data for SAP Accounting for Insurance Contracts... 7 Customizing for SAP Accounting for Insurance Contracts... 9 Standard Objects in SAP Insurance Analyzer... 12 SDL Timestamp... 14 IFRS for Insurance Process... 15 Calculation Management... 16 Application Help SAP Insurance Analyzer 1.0 4
SAP Accounting for Insurance Contracts Use The SAP Insurance Analyzer SAP Accounting for Insurance Contracts is one of the Solutions included in SAP Insurance Analyzer. SAP Accounting for Insurance Contracts is based on the SAP Accounting for Financial Products (AFP), also called Accounting for Financial Instruments (AFI) and the Business Content delivered by SAP. SAP Accounting for Insurance Contracts focuses on 1. IFRS 4 Phase 2 compliant Accounting and Valuation of Insurance Contracts 2. Solvency II and IFRS 4 Phase 2 compliant Actual Accounting to compare actuals with estimates. The goal of the solution is that subsequent processes for the balance sheet, disclosure and notes reporting have all the data they need. SAP Accounting for Insurance Contracts is compliant with IFRS Foundation and IASB (International Accounting Standards Board) and the publications from this institution regarding Insurance Contract liability measurement, particularly the Exposure Draft Insurance Contracts document in the version of July 2010. All relevant documents can be accessed via this link: http://www.ifrs.org/current-projects/iasb-projects/insurance-contracts/pages/currentstatus.aspx The two basic measurement processes described by those documents are supported by SAP Accounting for Insurance Contracts and shown here in overview: The measurements relate to the different events during the life-cycle of an insurance policy. These events are: Pending Initial Recognition of the contract Application Help SAP Insurance Analyzer 1.0 5
Initial Recognition of the contract Policy Change Premium Payment Benefit Payment Claims and Claims Settlement Portfolio Transfer Business Combination Derecognition Each of these events either directly trigger a measurement (e.g. claims) or affect the periodical measurement (Accrual & Deferral, Key Date Valuation) and are therefore supported by SAP Accounting for Insurance Contracts. Integration SAP Accounting for Insurance Contracts is based on SAP Integrated Finance and Risk Architecture (IFRA) and its implementation in the Bank Analyzer framework. You can find the application help for Bank Analyzer under the following link: http://help.sap.com/saphelp_banking80/helpdata/en/fd/cdc23b95c8cb6fe10000000a114084/fram eset.htm. Prerequisites Foundation Data Customizing For more information, see the following chapters. Application Help SAP Insurance Analyzer 1.0 6
Foundation Data for SAP Accounting for Insurance Contracts Interest Rates To enable accounting in the SAP Insurance Analyzer, yield curves should be defined. Within a particular yield curve one or more reference interest rates should be inserted. In case the object currency of all assets and liabilities considered in accounting equals the legal entity s balance currency, only one yield curve, corresponding to the legal entity s balance currency, has to be defined. Nonetheless several reference interest rates can be inserted for this yield curve, for example reference interest rates for different maturities and credit qualities. In case the object currency of one or more assets or liabilities is not the same as the legal entity s balance currency, yield curves for each distinct object currency should be defined, as well as reference interest rates associated with them. SAP Easy Access SAP Menu Financial Servies Foundation Market Data Interest Amongst others, specific values for a particular yield curve s reference interest rates at a particular date can be inserted into the SAP Insurance Analyzer by making use of the Non-SAP Data Management Solution. Specifically, in the transaction Data Management Inbound Services the step sequence FMD_IR Reference Interest Rates should be selected. SAP Easy Access SAP Menu Financial Services Insurance Analyzer Data Management Inbound Services Exchange Rates In case assets or liabilities with an object currency different from the legal entity s balance currency are considered in accounting, exchange rates between object currency and balance currency should be provided to enable accounting. SAP Easy Access SAP Menu Financial Servies Foundation Market Data Exchange Rates Amongst others, exchange rates at a particular date can be added to the SAP Insurance Analyzer by making use of the Non-SAP Data Management Solution. Specifically, in the transaction Data Management Inbound Services the step sequence FMD_FX Foreign Exchange Rates should be selected. SAP Easy Access SAP Menu Financial Services Insurance Analyzer Data Management Inbound Services Market Prices Assets such as shares and bonds can be assigned market prices. Application Help SAP Insurance Analyzer 1.0 7
SAP Easy Access SAP Menu Financial Servies Foundation Market Data Prices for Financial Instruments Amongst others, market prices for assets can be inserted in the SAP Insurance Analyzer by making use of the Non-SAP Data Management Solution. Specifically, in the transaction Data Management Inbound Services the step sequence FMD_SEC Prices for FI should be selected. SAP Easy Access SAP Menu Financial Services Insurance Analyzer Data Management Inbound Services Note that the market price of an asset, having a particular currency, can only be assigned to a particular exchange when this currency is supported by this exchange. Market Data Scenarios Market data scenarios provide different scenarios of market parameters such as yield curves, exchange rates, etcetera. SAP IMG Financial Services Foundation Market Data Market Data Scenarios Edit Market Data Scenarios Application Help SAP Insurance Analyzer 1.0 8
Customizing for SAP Accounting for Insurance Contracts Flow Type External (estimated) cashflows are uploaded classified by their flow type. SAP IMG Financial Services Insurance Analyzer Source Data Layer Primary Objects Master Data Settings for Attributes Cash Flow Data Edit Flow Types for Flow As per standard business content six flow types for life insurance are provided: YIGB future guaranteed benefits YIDB future discretionary benefits YICO future expenses and other cash outflows YIPR future premiums YICI future other cash inflows For non-life these flow types related to claim provisions are provided: YSCAD claim provision administration expenses YSCAL claim provision allocated LAE* YSCCA claim provision counterparty adjustment YSCCL claim provision claim YSCFE claim provision future premium existing business YSCOI claim provision other inflow YSCOO claim provision other outflow YSCRE claim provision reinsurance recoverable YSCUL claim provision unallocated LAE And for non-life these flow types related to premium provisions are provided: YSPAD premium provision administration expenses YSPAL premium provision allocated LAE YSPCA premium provision counterparty adjustment YSPCL premium provision claim YSPPE premium provision future premium existing business YSPFE premium provision future premium future business YSPOI premium provision other inflow YSPOO premium provision other outflow YSPRE premium provision reinsurance recoverable YSPUL premium provision unallocated LAE * LAE are Loss Adjustment Expenses General Derivations General derivations for both life and non-life cashflows are defined in the SAP Insurance Analyzer. The Derivation Environment YIVALUPARA with corresponding Derivaton Module YIVALUPARA is used. Different derivation steps for each life, non-life and reinsurance cashflows are available. Application Help SAP Insurance Analyzer 1.0 9
SAP IMG Financial Services Insurance Analyzer Infrastructure Communication & Worklist Services Data Sources General Derivations Selection Group Selection groups are used in predefined parts of the SAP Insurance Analyzer where clientdependent solutions are necessary. One example of selection group usage is selecting the relevant Financial Position IDs to be used in the Model Point Process. SAP IMG Financial Services Insurance Analyzer Processes and Methods General Calculation and Valuation Methods Insurance Master and Flow Data Step Sequence Various customizing options can be performed here, including: Defining the order of application of step sequences Setting the cashflow start date type for liability cashflows Application of filters and assignments for data aggregation and ad hoc reporting Assigning the market data area SAP IMG Financial Services Insurance Analyzer Processes and Methods General Calculation and Valuation Methods Insurance Master and Flow Data Edit Sequence Steps Assignment of Flow Types to Calculation Steps For each calculation step (and the relevant key figures) in Calculation Management the relevant flow type can be determined. Further distinction is made for which measurement approach (BBA and/or PAA) this calculation step assignment applies SAP IMG Financial Services Insurance Analyzer Processes and Methods Accounting for Financial Products After Generation Financial Position Processes Processing of Internal Business Transactions Key Date Valuation Accounting Processes Insurance Valuation Components Assign Flow Types to Calculation Steps Assignment of dependent Key Figures For each calculation step (and the relevant key figures) in Calculation Management you can define additional key figures which are dependent on the calculation. You can also define the flow type that is affected and the direction of the flow SAP IMG Financial Services Insurance Analyzer Processes and Methods Accounting for Financial Products After Generation Financial Position Processes Processing of Internal Business Transactions Key Date Valuation Accounting Processes Insurance Valuation Components Assign dependent Key Figures Step Sequence (Processing of Internal Business Transactions) For the Update of Secondary Business Transactions and the Key Date Valuation in SAP Accounting for Insurance Products the step sequences of the CVPM processes and the properties of each step are defined here. Application Help SAP Insurance Analyzer 1.0 10
SAP IMG Financial Services Insurance Analyzer Processes and Methods Accounting for Financial Products After Generation Financial Position Processes Processing of Internal Business Transactions Key Date Valuation Accounting Processes Insurance Valuation Components Edit Sequence Steps External Data stored as Generic Market Data Refer to http://help.sap.com/saphelp_banking80/helpdata/en/5a/d2dc3e3e343d67e10000000a114084/con tent.htm The following GMD classes are part of the delivered business content and are used to store the customer-specific external data: YIFLOW: external cashflows YINPVPTBC: present value for portfolio transfers and business combinations. SAP Easy Access SAP Menu Financial Services Insurance Analyzer Source Data Layer Primary Objects Generic Market Data Application Help SAP Insurance Analyzer 1.0 11
Standard Objects in SAP Insurance Analyzer SAP Insurance Analyzer uses the standard objects already provided by SAP Bank Analyzer. These include Financial Transactions, Financial Instruments, Settlement Accounts, Positions, Business Transactions, Accounts and Physical Assets. Use Insurance specific additional templates include: Insurance Policy (Y40POL) Insurance Policy Contract (Y40POLC) Insurance Policy Contract Coverage (Y40POLCV) Insurance Policy Coverage Option (Y40POLCVO) Reinsurance Treaty (Y40TRTY) Reinsurance Treaty Period/Generation (Y40TRTYG) Reinsurance Treaty Section (Y40TRTYGS) Reinsurance Treaty Participation (Y40TRTYGSP) In addition, a new version, YIA for all insurance relevant objects such as bonds, shares, physical assets etc. is available for use by insurers. Structure Direct Insurance Application Help SAP Insurance Analyzer 1.0 12
Reinsurance Application Help SAP Insurance Analyzer 1.0 13
SDL Timestamp The SDL Timestamp is used to set the time stamp for data within the specified legal entity that will be used in the following SAP Accounting for Insurance Contracts process. The system reads only the data with a time stamp that is before or equal to the set SDL Timestamp specified. This ensures that the system does not access new data versions when rereading data. SAP Easy Access SAP Menu Financial Services Insurance Analyzer Processes & Methods Set SDL Timestamp Application Help SAP Insurance Analyzer 1.0 14
IFRS for Insurance Process Use The IFRS for Insurance process is focusing on IFRS 4 Phase II compliant Accounting and Valuation of Insurance Contracts and also Solvency II and IFRS 4 Phase II compliant Actual Accounting to compare actuals with estimates. Process Refer to http://help.sap.com/saphelp_banking80/helpdata/en/4d/cb7270c11a6599e10000000a15822b/con tent.htm The following processes must or can be run: Process Description Optional or mandatory Data Management Upload and Inbound Services Run reconciliation report Close SDL Timestamp Run daily accounting processing including Post External Business Transactions Update Secondary Business Transactions Run Key Date Valuation Transfer master and flow data from SAP and non-sap systems External business transactions are posted from the SDL to Accounting to a position clearing account Update Secondary picks up the posted business transactions from previous step and performs additional internal accounting calculations as necessary. Financial positions valued as at key date Mandatory, but different (customer-specific) ETL processes can be used Optional Mandatory Mandatory Mandatory Mandatory Prerequisites See above regarding Foundation data, customizing settings and generic market data. Application Help SAP Insurance Analyzer 1.0 15
Calculation Management Refer to http://help.sap.com/saphelp_banking80/helpdata/en/4d/4691d592e61b32e10000000a42189b/con tent.htm The following calculation procedure templates are part of the Business Content of Insurance Analyzer and can be used to define calculation procedures. Overview of available calculation procedure templates Template Description Procedure Class YC01 IFRS Benefit/Claim Reserve Elem.Der.-V.Date-Bsd YC51 IFRS Benefit/Claim Reserve Elem.Der.-Not V.Date YP01 IFRS Initial Recognition Elem.Der.-V.Date-Bsd YP03 IFRS Pending Initial Recognition Elem.Der.-V.Date-Bsd YP05 IFRS Policy Change Elem.Der.-V.Date-Bsd YP07 IFRS Portfolio Transfer In Elem.Der.-V.Date-Bsd YP09 IFRS Business Combination Elem.Der.-V.Date-Bsd YP11 IFRS Derecognition Elem.Der.-V.Date-Bsd YP13 IFRS Premium Reserve Elem.Der.-V.Date-Bsd YP51 IFRS Initial Recognition A Elem.Der.-Not V.Date YP53 IFRS Pending Initial Recognition A Elem.Der.-Not V.Date YP55 IFRS Policy Change A Elem.Der.-Not V.Date YP57 IFRS Portfolio Transfer In A Elem.Der.-Not V.Date YP59 IFRS Business Combination A Elem.Der.-Not V.Date YP61 IFRS Derecognition A Elem.Der.-Not V.Date YP63 IFRS Premium Reserve A Elem.Der.-Not V.Date YPA1 IFRS Accrual and Deferral Accrual/Deferral YPV1 IFRS Building Blocks Measurement Key Date Valuation YPV2 IFRS Premium Allocation Measurement Key Date Valuation Application Help SAP Insurance Analyzer 1.0 16
These calculation procedure templates consist of the following calculation steps which are required by IFRS 4 Phase II. Overview of calculation steps per calculation procedure template Template Description Calculation Step Description YC01 IFRS Benefit/Claim Reserve YP5E IFRS Operational Amount Reserve YC51 IFRS Benefit/Claim Reserve YC61 IFRS Component Onerous Risk Adjustment YP01 IFRS Initial Recognition YP51 IFRS Nominal Sum YP55 IFRS Operational Amount YP5C IFRS Operational Amount Deferral YP03 IFRS Pending Initial Recognition YP51 IFRS Nominal Sum YP53 IFRS Nominal Sum Adjustment YP55 IFRS Operational Amount YP57 IFRS Operational Amount Adjustment YP5C IFRS Operational Amount Deferral YP05 IFRS Policy Change YP51 IFRS Nominal Sum YP55 IFRS Operational Amount YP5C IFRS Operational Amount Deferral YP07 IFRS Portfolio Transfer In YP51 IFRS Nominal Sum YP55 IFRS Operational Amount YP5A IFRS Operational Amount Accrual YP5C IFRS Operational Amount Deferral YP09 IFRS Business Combination YP51 IFRS Nominal Sum YP55 IFRS Operational Amount YP5C IFRS Operational Amount Deferral YP11 IFRS Derecognition YP51 IFRS Nominal Sum YP55 IFRS Operational Amount YP5A IFRS Operational Amount Accrual YP5C IFRS Operational Amount Deferral YP5E IFRS Operational Amount Reserve YP13 IFRS Premium Reserve YP5E IFRS Operational Amount Reserve YP51 IFRS Initial Recognition A YP61 IFRS Discount Rate Change YP63 IFRS Component Accrual YP65 IFRS Component Deferral YP67 IFRS Component Valuation YP6A IFRS Residual Margin Valuation YP53 IFRS Pending Initial Recognition A YP61 IFRS Discount Rate Change YP63 IFRS Component Accrual YP65 IFRS Component Deferral Application Help SAP Insurance Analyzer 1.0 17
YP67 IFRS Component Valuation YP55 IFRS Policy Change A YP61 IFRS Discount Rate Change YP63 IFRS Component Accrual YP65 IFRS Component Deferral YP67 IFRS Component Valuation YP6A IFRS Residual Margin Valuation YP57 IFRS Portfolio Transfer In A YP61 IFRS Discount Rate Change YP63 IFRS Component Accrual YP65 IFRS Component Deferral YP67 IFRS Component Valuation YP6C IFRS Residual Margin Portf.Trans./Bus.Combin. Valuation YP59 IFRS Business Combination A YP61 IFRS Discount Rate Change YP63 IFRS Component Accrual YP65 IFRS Component Deferral YP67 IFRS Component Valuation YP6C IFRS Residual Margin Portf.Trans./Bus.Combin. Valuation YP61 IFRS Derecognition A YP61 IFRS Discount Rate Change YP63 IFRS Component Accrual YP65 IFRS Component Deferral YP67 IFRS Component Valuation YP6A IFRS Residual Margin Valuation YP63 IFRS Premium Reserve A YP65 IFRS Component Deferral YPA1 IFRS Accrual and Deferral YP5A IFRS Operational Amount Accrual YP5C IFRS Operational Amount Deferral YPV1 IFRS Building Blocks YP61 IFRS Discount Rate Change Measurement YP63 IFRS Component Accrual YP65 IFRS Component Deferral YP67 IFRS Component Valuation YPV2 IFRS Premium Allocation Measurement YP61 IFRS Discount Rate Change YP63 YP65 IFRS Component Accrual IFRS Component Deferral Application Help SAP Insurance Analyzer 1.0 18