Adjust Insurance Premium Ck transaction (tran code 2940-02) |
  
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Navigation: Loans > Loan Screens > Insurance Screen Group > Adjustments Screen > Processing transactions >
Adjust Insurance Premium Ck transaction (tran code 2940-02) |
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The Adjust Insurance Premium Ck transaction (tran code 2400-02) is used to perform an adjustment to the account when an insurance premium must be changed. Several aspects of the account are affected. The adjustment is reported at the end of the month with regular insurance reporting.
See the Calculating new insurance premiums with a check topic for step-by-step instructions on how to process this transaction.
Once the transaction is complete, the system performs the following file maintenance (these fields are found on the Loans > Insurance > Policy Detail screen):
| • | A Cancellation Code of 2 (flat cancel) is entered on the insurance policy with the Cancellation Date as the Policy Effective Date. |
| • | The Original Premium amount is entered in the Refund Amount field. See below: |
Insurance Policy Detail screen, Policy Information tab
| • | The Remaining Amount of cost, commissions, and finance charges are cleared out to prevent the original policy from further amortizing. There are no monetary transactions created from clearing these fields. See below: |
Insurance Policy Detail screen, Commission Information tab
A new insurance record is created with the following information:
| • | Clears out the date the policy was first reported so the new policy can be created. |
| • | The premium is adjusted by the change between the old premium and the new one. The new premium will be equal to the Tran Amount entered on the Adjust Insurance with a Check transaction. |
| • | A finance charge is incurred on the loan if the amount of change in the premium meets all the following criteria: |
1.Precomputed loan (payment method 3)
2.Loans with a policy type equal to 90-99.
3.Institution Option IVSI is enabled.
4.Loans with an existing finance charge.
| • | New original costs and commissions are calculated based on the new premium using the information entered on the GOLD Services > General Ledger > Setup G/L and Commissions screen. In addition, remaining costs and commissions will also be adjusted by the change in premium. |
| • | The Remaining Amount of costs and commissions are amortized (or unamortized) to reflect the change in premium with tran codes 461 (Insurance Commission-Debit), 462 (Insurance Commission-Credit), 761 (Insurance Costs-Debit), and 762 (Insurance Costs-Credit). |
| • | In General Ledger, the old finance charge is removed with a tran code 1800 (General Ledger debit) using the Unearned Interest G/L account found on the GOLD Services > General Ledger > GL Account By Loan Type screen. Then the new finance charge amount based on the new premium is booked with a tran code 1810 (General Ledger credit) to the same G/L account. |
| • | On precomputed loans (payment method 3) with a policy type of 90-99, Institution Option IVSI is enabled, and an existing finance charge, the Remaining Amount of the finance charge will be amortized (or unamortized) to reflect the change in premium with tran codes 532 (Amortize Insurance Finance Charge) and 534 (Unamortize Insurance Finance Charge). |
Insurance Policy Detail screen, Finance Charge tab
| • | Replaces the Coverage Amount on the Policy Detail screen with the new coverage amount entered on the transaction screen. If the new coverage amount is zero (0) or blank, information in the Coverage Amount field will not be replaced. |
On insurance reports (FPSRP204–Insurance-New and Canceled VSI Insurance, FPSRP205–Insurance-Credit Life, Accident & Health, and Unemployment, and FPSRP207–Insurance-New and Canceled Property Insurance), the old policy shows as canceled and the new insurance record with the changes shows as a new policy.
Changes in this transaction from the Adjust Insurance Premium transaction (tran code 2940-00) include:
| • | This transaction includes a Check Out number and Check Out Amount. Both are required fields for this transaction to process properly. |
| • | This transaction calculates the amount the refund should be, and if it does not match the Check Out Amount, the transaction will cancel with an error message indicating the amount the check should be. |
| • | This transaction will change the premium, but instead of adjusting the principal balance with the premium changes, a check is created to give back to the borrower that reflects what the principal change would have been. |
| • | This transaction will not allow a premium (coverage amount) to be increased; it will only allow a premium to be decreased. |
| • | This transaction will not adjust the P/I constant. |
| • | In General Ledger, when adjusting the finance charge, the finance charge will show as if it is removed completely with a tran code 1800 (General Ledger debit), then reinstated at the new amount with a tran code 1810 (General Ledger credit). |
| • | In General Ledger, rather than reducing the principal balance, we create a General Ledger tran code 1812 in the place where the principal reduction would normally be (tran code 510-credit). At the end of the transaction, a General Ledger debit (tran code 1800) by check out will be run for the amount of the premium (and finance charge, if applicable) adjustment. The G/L account number used for this transaction will be the Teller Journal Clearing Account field found on the GOLD Services > General Ledger > GL Account By Loan Type screen. |
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Note: You must have teller 8940 set up before you can run this transaction. |
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