Sch F Part 3 Columns 48 & 50
I'm struggling to understand Schedule F, Part 3, Column 50: Percentage of Amounts More than 90 Days Overdue Not in Dispute (Column 47 / [Columns 46 + 48]), because I'm failing to understand what the denominator represents, because I'm not understanding Column 48: Amounts Received Prior 90 Days, and how that fits in.
According to Odomirok,
"Columns 49 through 50 provide percentages of the overdue balances to total amounts due ... column 50 provides the percentage overdue greater than 90 days and not in dispute (column 47 divided by columns 46 plus 48)".
The numerator of Column 50 is just Column 47 which is Recoverables on Paid Losses and LAE Over 90 Days Past Due Amounts NOT in Dispute, so I would've expected the "total" to be either Total Amounts Due (Column 46) - which is what was used in Column 49's denominator, or Total Recoverables Over 90 Days Overdue (Columns 40 + 41), or Total Amounts NOT in Dispute (Column 46).
Clearly this is based on the last optiom, but I'm failing to see how Column 46: Total Amounts NOT in Dispute is missing something that Column 48: Amounts Received Prior 90 Days adds back in. To my brain they are completely separate, unrelated items.
I know there is no way this will remotely be tested, but my brain is refusing to let this go and so I keep finding myself distracted by this when I try to move on, so I'm hoping someone can help explain this so I can actually focus on the things I do need to know for the exam.
Thanks!
Comments
To recap, Column 50 is the slow-pay test ratio. If it is greater than 20%, the reinsurer is deemed slow-paying. This is a criterion applied on authorized reinsurers. It determines which one of the two formulas to use for their reinsurance provision.
Amounts in dispute are not used in this ratio: they want to ascertain slowness without the effect of disputes.
Column 47 epitomizes slowness in payment. To give a ratio metric, this should be divided by a base that includes both receivables and amounts received (paid by the reinsurer). It is in the interest of fairness that they also recognize the amounts that the reinsurer actually paid in the last quarter. So, Column 48 acts like a kind of ballast in the base.
Thank you!
Sure, good luck.