Commutation

Commutation. The SurSITE^® Contract Management Server provides extended support for the increasingly important commutation process. There are two methods currently available in managing commutation. The simplified alternative as assumes that the commutated participant is removed from the treaty at the commutation effective date of an underwriting year. Thereafter, the treaty is reinstated until its normal expiration date with the remaining participants. This method allows one or several remaining participants to assume the commutated liability on a pro rata basis or leave the treaty at a subscribed percentage below 100% where the reinsured assumes the commutated balance i.e. the retention of the reinsured is increased by the percentage of the commutation.

Extended Commutation Process. The second and more extensive alternative handles direct as well as brokered reinsurance participants. The extended version offers the ability to "flag" a direct participating reinsurer and select the commutation effective date, credit the account with an agreed commutation amount. Once completed, the transaction engine will continue to allocate all related claims and premium transactions related to the commutated participant but stop generation of Loss Recovery Notices and Claim Notifications. The reinsured can thereafter generate statements of accounts to follow the development of the commutated portion of the treaty.