When configuring Mid-Term Adjustment (MTA) rating files in SchemeServe, it is important to understand how Loads and Discounts are calculated. Their behaviour can affect whether an adjustment produces an Additional Premium (AP) or Return Premium (RP).
- Additional Premium (AP): an extra premium generated when a change increases the amount due.
- Return Premium (RP): a premium returned when a change reduces the amount due.
- Loads and Discounts: adjustments calculated against the subtotal of the Calculation Fields being rated.
Key point: If the relevant Calculation Fields have not changed during an MTA, their adjustment subtotal may be £0.00. A percentage Load or Discount calculated against that subtotal may therefore produce no Additional Premium or Return Premium.
1. The Issue
An MTA may not generate an Additional Premium or Return Premium when only a Load or Discount changes.
For example, an occupancy rate may increase during the policy term. If that change is configured only as a percentage Load and none of the underlying Calculation Fields are being rerated, the MTA calculation subtotal may remain at £0.00.
Calculation Field adjustment subtotal: £0.00
Load: 10%
10% of £0.00 = £0.00 adjustmentThe Load has changed, but it has no monetary subtotal to act on. The result is no AP or RP.
2. Why This Happens
Loads and Discounts are calculated against the subtotal produced by the Calculation Fields being rated. During an MTA, SchemeServe is evaluating the financial effect of the change rather than simply repeating the full New Business premium.
This means the outcome depends on both:
- which fields have changed during the MTA; and
- how the relevant Calculation Fields, Loads and Discounts are configured and ordered.
Example: If only an occupancy Load changes and the Calculation Fields beneath it contribute £0.00 to the MTA, the percentage Load may also calculate as £0.00.
3. Setting to Review
Under Scheme Settings, review the following option:
Do not convert rates to fees when adjustments are made
Unticking this option allows percentage-based rates to be converted into monetary amounts during adjustments. In the example investigated, this allowed the correct Additional Premium to be generated when the Load changed.
Before Changing the Setting
This setting should not automatically be disabled for every scheme. The correct choice depends on the scheme's rating structure and the intended treatment of rates during adjustments.
Important: Review and test the complete rating structure before changing this setting. Confirm that premiums remain correct for New Business, MTAs and Renewals.
4. Review the Rating Structure
If a Load or Discount is not producing the expected result, do not rely on the scheme setting alone. Review how the premium has been built.
Calculation Fields or Loads and Discounts
Check whether the rating fields should be configured as Calculation Fields rather than Loads or Discounts. If a value needs to produce its own monetary premium during an MTA, a Calculation Field may be more appropriate than a percentage modifier applied to another subtotal.
Calculation Order
Consider how multiple Loads and Discounts interact. Their order can affect both the subtotal they act on and the final premium.
Check:
- which Calculation Fields contribute to the subtotal;
- the order in which Loads and Discounts are applied;
- whether one modifier should act on a subtotal that already includes another modifier; and
- whether the intended result is a percentage adjustment or a fixed monetary amount.
Discretionary Adjustments
Where appropriate, include discretionary Load or Discount fields so authorised users can apply either:
- a percentage adjustment; or
- a fixed monetary adjustment.
Good practice: Use discretionary fields only where they fit the scheme's underwriting controls and user permissions. Test how they affect the premium and accounting outcome.
5. Do Not Copy New Business Rating Without Review
An MTA rating file should not simply duplicate the New Business rating file without reviewing every formula.
Formulas that are correct at New Business may be inappropriate during an adjustment. For example, a formula that sets an inception or expiry date for New Business could incorrectly change the policy expiry date when the MTA runs.
Important: Review date formulas, version controls, SetCover actions, fees, minimum premiums and other New Business logic before including them in an MTA rating file.
Questions to Ask
- Should this formula run during an MTA?
- Should it use the original policy value, the current value or only the changed value?
- Could it unintentionally change a policy date, version or previously agreed rate?
- Should the result be prorated for the remaining policy term?
6. Testing Checklist
Test the change in a suitable test scheme or case before applying it to live business.
| Test | What to Confirm |
|---|---|
| New Business | The initial premium, Loads, Discounts, fees and policy dates remain correct. |
| MTA: Load increase | The expected Additional Premium is generated when only the Load changes. |
| MTA: Discount increase | The expected Return Premium is generated when only the Discount changes. |
| MTA: Calculation Field and modifier change | The modifier acts on the intended subtotal and the AP or RP is correct. |
| MTA: No premium-bearing change | No unintended AP, RP, fee or policy date change is produced. |
| Renewal | Renewal rates, modifiers, fees and dates remain correct after the change. |
Check the full result: Review the matrix values, final AP or RP, prorating, policy dates, fees and accounting transactions. Do not confirm the fix from a single line of rating output.
7. Troubleshooting Summary
| Issue | What to Review |
|---|---|
| A Load or Discount changes but no AP or RP is generated | Check whether the MTA Calculation Field subtotal is £0.00 and review the rate-to-fee scheme setting. |
| The AP or RP amount is incorrect | Check the modifier base, calculation order, prorating and interaction between multiple Loads and Discounts. |
| The policy dates change during the MTA | Review New Business inception and expiry formulas copied into the MTA rating file. |
| The fix works for MTA but changes New Business or Renewal results | Reassess the shared scheme setting and rating structure; do not apply the change based on one MTA test alone. |
Key Points to Remember
- Loads and Discounts act on the subtotal of the Calculation Fields being rated.
- If the MTA subtotal is £0.00, a percentage modifier may also produce a £0.00 adjustment.
- Review Do not convert rates to fees when adjustments are made, but do not untick it automatically for every scheme.
- Review field types, modifier order, prorating and discretionary adjustments.
- Do not copy New Business formulas into an MTA rating file without reviewing their effect.
- Test the complete outcome across New Business, MTA and Renewal.
Need help? If you need assistance reviewing an MTA rating structure or testing premium outcomes, contact our Obsessive Support team.
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