Manual adjustments for payments

Manual adjustments occur when a payment is issued on an incorrect L1/L2 reserve category. Setting reserves and issuing payments on the incorrect L1/L2 reserve category can occur in the following situations:

  • A claim is entered without a policy.
  • There is an out-of-sequence endorsement on the policy that the claim is filed against.
  • User error.

Users with specific permissions can complete manual adjustments. For example, clients can determine that users with the role Claims Supervisor have permission to complete manual adjustments.

Completing a manual adjustment is a multi-step process. To complete a manual adjustment, you will move a payment from one L1/L2 reserve category to another L1/L2 reserve category within the same exposure, in a different exposure within the same claim, or in a different exposure in a different claim. To ensure that reserves and payments balance correctly, first:

  1. Identify the claim number, exposure ID, L1/L2 reserve category, transaction code, transaction ID, and the payment amount of the original payment.
  2. Identify the claim number, exposure ID, L1/L2 reserve category, and transaction code for the new payment.

After you identify where the original payment is located and where the payment will be moved to, complete the following:

  1. Offset the original payment amount.
  2. Locate and set the reserve for the correct L1/L2 reserve category.
  3. Create a new payment for the adjusted amount.

Offset the original payment amount

  1. In the Exposure Accounting Summary associated with the original payment, navigate to the Actions column of the L1/L2 reserve category that the original payment was issued on and select Make Payment. The Make Payment dialog box will open.
  2. In the Make Payment dialog box, ensure the Payee Information fields display the correct information and complete the Address Information fields.

    Note: Information in the Payee Information and Address Information fields should match the information included in the original payment.

  3. Under Payment Information, ensure the Reserve Category and Transaction Code display the correct information.

    Note: Information displayed in the Reserve Category and Transaction Code fields should match information included in the original payment.

  4. Ensure the Due Date field displays today’s date.
  5. From the Payment Method dropdown list, select Manual Adjustment.
  6. From the Payment Type dropdown list, select either Final Payment or Partial Payment.
  7. In the Payment Amount box, type – <Original payment amount>. For example, if the original issued payment is $500, to offset this payment amount and return the L1/L2 reserve category to its original state before the payment was issued, you would type – 500.
  8. When you select Manual Adjustment, the Comments section in the Make Payment dialog box becomes a required field. In the Comments box, type the reason for the manual adjustment and reference:
    • The claim number, exposure ID/coverage name, L1/L2 reserve category, transaction code, and the transaction ID of the original payment.
    • The claim number, exposure ID/coverage name, L1/L2 reserve category, transaction code of the new payment.

      This payment <Claim NumberExposure IDCoverage Name>, <L1/L2 Reserve Category>, <Transaction Code>, with Transaction ID: <Transaction ID>has been moved to <Claim NumberExposure IDCoverage Name>, <L1/L2 Reserve Category>, <Transaction Code>.

  9. Select Submit Payment.

Locate and set new reserve

Ensure the manual adjustment is completed correctly and that the reserves and payments balance by identifying the correct L1/L2 reserve category and setting the reserve amount.

  1. Navigate to the Exposure Accounting Summary associated with the exposure that the payment will be moved to. Locate the correct L1/L2 reserve category for the payment.
  2. Review the reserve amount set.
  3. If the reserve amount is less than the payment amount, in the Actions column select Edit Reserve. The Edit Reserve dialog box will open.
  4. In the New Reserve box, type the new reserve amount. This amount must be equal to or more than the payment amount. The Change By box will automatically update with the value you’re increasing the reserve by.
  5. In the Comments box, type the reason for changing the reserve. For audit purposes, it is helpful to note the claim number, exposure ID/coverage name, L1/L2 reserve category, transaction code, and transaction ID of the originating payment as well as the claim number, exposure ID/coverage name, L1/L2 reserve category, and transaction code of the new payment. For example:

    Reserve change for payment. This payment <Claim NumberExposure IDCoverage Name>, <L1/L2 Reserve Category>, <Transaction code>, with Transaction ID: <Transaction ID> has been moved to <Claim NumberExposure IDCoverage Name>, <L1/L2 Reserve Category>, <Transaction Code>.

  6. Select Submit Reserve.

Create new payment

  1. In the Actions column of the Exposure Accounting Summary associated with the L1/L2 reserve category that you’re moving the payment to, select Make Payment.
  2. Ensure the Payee Information fields display the correct information and complete the Address Information fields.

    Note: The Payee Information and Address Information fields should display the same information as the original payment.

  3. Under Payment Information, ensure the Reserve Category and Transaction Code are displaying the correct information.
  4. Ensure the Due Date field displays today’s date.
  5. From the Payment Method dropdown list, select Manual Adjustment.
  6. From the Payment Type dropdown list, select Final Payment or Partial Payment.
  7. In the Payment Amount box, type the amount of the payment.

    Note: The payment amount must match the amount of the original payment.

  8. When you select Manual Adjustment, the Comments section in the Make Payment dialog box becomes a required field. In the Comments box, type the reason for the manual adjustment and type the claim number, exposure ID/coverage name, L1/L2 reserve category, transaction code, and the transaction ID of the original payment. For example:

    This payment was moved from <Claim NumberExposure IDCoverage Name>, <L1/L2 Reserve Category>, <Transaction Code>, and was originally created with Transaction ID: <Transaction ID>.

  9. Select Submit Payment.

Usage considerations

In the future, the adjustments made when moving a transaction from one L1/L2 reserve category to another will become more automated.

To ensure the reserves and payments balance, manual adjustments should only be completed on transactions with the status Posted. If you complete a manual adjustment on a transaction with the status Draft or the status Approved, the payment and reserve amounts won’t balance.

Draft status

When a transaction’s status is Draft, the amount of the transaction isn’t subtracted from the reserve. If you complete a manual adjustment on a transaction in Draft status, you will increase the reserve limit and the Exposure Accounting Summary won’t balance. For example:

  • The Loss Reserve is $7,000. You create but don’t submit a payment in the amount of $1,500. The Loss Reserve remains $7,000 and the Loss Payment remains $0 because you didn’t submit the payment. To undo this transaction, you complete a manual adjustment. When you offset the original payment in a manual adjustment, you type in a negative amount. In this case, you type -1,500. The Loss Reserve increases to $8,500 and the Loss Payment changes to -$1,500.

To undo a transaction in Draft status:

  1. In the Transactions table, navigate to the Actions column of the transaction you want to reverse and select the ellipsis.
  2. Select Delete.

Approved status

When a transaction’s status is Approved, the transaction amount is subtracted from the reserve, but it isn’t processed. If you complete a manual adjustment on a transaction in Approved status, the reserve will return to the original state, but the transaction won’t be reversed and the Exposure Accounting Summary won’t balance. If you reverse the transaction after you complete a manual adjustment, the Payment column will reflect this change, and the reserve will increase by this amount, so the Exposure Accounting Summary won’t balance. For example:

  • The Loss Reserve is $7,000. You create and submit a payment in the amount of $1,500. The payment is approved, but it isn’t processed. The Loss Reserve is $5,500 and the Loss Payment is $1,500. To undo this transaction, you decide to complete a manual adjustment. When you offset the original payment in the manual adjustment, you type in the negative amount. In this case, you type -1,500. The Loss Reserve returns to $7,000, but the Loss Payment remains at $1,500 because the payment wasn’t processed and can’t be reversed by a manual adjustment. To reverse the transaction, you decide to unapprove it. When you unapprove the transaction the Loss Reserve increases to $8,500 and the Loss Payment returns to $0.00.

To undo a transaction in Approved status:

  1. In the Transactions table, navigate to the Actions column of the transaction you want to unapprove and select the ellipsis.
  2. Select Unapprove. A Payment pop-up window will open asking the following:

    Are you sure you want to unapprove payment?

  3. Select Yes to unapproved the payment. When you unapprove a transaction, the transaction’s status changes to Draft.