Insurance Values
Purpose
The fixed assets belonging to an enterprise are normally insured against damage or loss. The insurance companies require certain values and information relevant to the insurance policies. You need to manage this information on an individual asset basis in the system.
The Insurance component enables you to manage insurance master data and insurance values for fixed assets. The current insurance values can be stored in the asset master record, or managed in a separate depreciation area. You can also increase or decrease the insurable value using index series.
Features
The system offers three methods of calculating the insurance value:
For value as new insurance, the APC or the indexed APC are used for the calculation of insurance value. By indexing you can account for price rate increases when determining the insurance value.
For example, the current insurance value for fire insurance for buildings is often based on index series that are published by the insurance carrier.
With current market value insurance, the APC, reduced by depreciation (that is, the book value) determines the insurance value. You can also use indexing for current market value insurance.
A special method is setting the insurance value manually in the master record. The insurance value is usually determined through agreement with the insurance carrier.
Insurance Type
The insurance type is the most important control feature for maintaining the insurance values. You define the different insurance types in Customizing for Asset Accounting. For each insurance type, you specify whether the current market value or the value as new is to be used as the insurance value. At the same time you specify the depreciation area to be used. These entries are needed for the following functions:
For value as new insurance, a depreciation area is needed for transferring the base insurable value (APC or indexed APC). You can use an area that is already set up (for example, book depreciation).
Here you can also use the current book values of an existing area. In order to be able to use reporting to your best advantage, however, it is recommended that you define a separate depreciation area for updating the insurance current market values.
The insurable value is managed in the currency of the depreciation area of the company code. The rounding rules of the depreciation area are also used for the insurable value and the base insurable value.
Base Insurable Value
The base insurable value is always stored for the last closed fiscal year in the asset master record. It is only needed for value as new insurance. The system determines the base value using the appropriate posting documents for the individual asset.
The annual updating of the base insurable value takes place only when the year-end closing program is run. Make sure that the index series for the year being closed are correct before you run the year-end closing. If you do not have index series at the time of the year-end closing, you have to update the base insurable value using a standard report (under Tools) as soon as the index series are maintained.
Insurance Value
You can display the insurance value for all fiscal years up to the current fiscal year. Depending on the type of insurance, the system then determines the insurance value based on the following:
The insurance value is determined by the base insurable value:
Insurable value =
(base insurance value + (asset transaction outstanding years * 100 / index of transaction year)) * index of current year / 100
Transactions from the outstanding fiscal years consist of acquisitions, transfer postings and asset retirements.
The average index of the increase of the base insurance value, and not the index of the respective retirement year, as specified in the formula, is used as the best approximation when asset retirements are included:
Index Prop. = 100 * accumulated APC beginning of the year / base insurance value beginning of the year
For transfer acquisitions to fixed assets that have already been posted, the transfer acquisition is also valued with the "Index Prop" as with asset retirements. During transfer acquisitions to a new fixed asset, the transfer acquisition is valued with the index of the acquisition year from the depreciation area.
Insurance value = book value * index current year / index of acquisition year (from depreciation area)
When an insurance value has been agreed upon with an insurance company, you can use the value which has been manually entered in the asset master record as the insurance value. There are two scenarios:
Current insurance value = manual insurance value * index (current year) / index (maintenance year)
For the legacy data transfer, you usually have to enter a maintenance year before the last closed fiscal year. Therefore, the limitation described above does not apply for the transfer transaction (create/change legacy asset).
Maintaining Insurance Data
Separate field groups exist for the insurance data in the asset master record. By maintaining the screen layout in the asset class, it is possible to activate or switch off insurance data for certain assets. Depending on the maintenance level specified, either the respective asset class supplies the fields with default values or you have to maintain the fields directly.
You define the individual insurance types in Customizing.
You enter an index series manually in the asset master record for calculating the insurance value.
You maintain the base insurance value directly in the master record if this field is offered in the asset view and the field status group.
When you set this indicator, the insurance value can only be updated manually. Indexing cannot take place.
Enter the insurance value that has been agreed upon with the insurance company. If needed, also enter the maintenance year.
At the present time, the insurance rate serves only informational purposes.