1. Adding value, inspiring innovation Insurance Deductions

2. Deductions Deduction Codes are an important part of Brokasure Enterprise (BE) because they are used to calculated nett premiums and premiums due from Clients. In addition they are used to calculate Third party shares. If fact they are used for all calculations. The Deduction relies on knowing who the Paid By party is and who the Part To party is. The common Paid By parties are Brokerage, Client, U/w. Common Paid To parties are Brokerage, Client, Loss Adj, Survey, Thrd Pty, U/w A full description of all the fields on the Deductions Code table can be found in the document Brokasure Enterprise Deduction Codes The following slides contain details of how EA_QA risk EX12AAHO was set up CONFIDENTIAL © Xchanging 2012, No part of this document may be circulated, quoted or reproduced without prior approval of Xchanging. 2

3. Deductions Firstly we need to know that the Deduction Codes have been set up properly. There are four important fields that we need to ensure are set the correct way. Deduction Level, Calculation Basis, Calculation Level and Effect Basis. For the demonstration we have used the following Deduction Codes. CONFIDENTIAL © Xchanging 2012, No part of this document may be circulated, quoted or reproduced without prior approval of Xchanging. 3 DedtnDeduction LevelCalculation BasisCalculation Level Effect Basis NCDClient AllowancesOriginal transaction grossClient AllowancesYes CLDNon-tax deductionsDerived transaction grossNon-tax deductionsNo IPTTax deductionsDerived transaction grossTax deductionsNo BKGNon-tax deductionsDerived transaction grossNon-tax deductionsNo DNANon-tax deductionsDerived nett amountNon-tax deductionsNo

4. Deductions Section 1 of our risk EX12AAHO has been set up without the DNA Deduction and will therefore be a straight forward transaction. The No Claim Discount is going to be calculated on the Original Transaction Gross premium and because this Deduction Code has been set up with the Effect Basis field ticked, this will “effect” the Derived Transaction Gross which is the next level of calculation. CONFIDENTIAL © Xchanging 2012, No part of this document may be circulated, quoted or reproduced without prior approval of Xchanging. 4 LevelSequenceAmount Gross Premium1,000.00Original Transaction Gross 11NCD @ 40%-400.00 Balance600.00Derived Transaction Gross 22Client Discount @ 7.5%-45.00 21Brokerage (Retained 15%-7.5%)-45.00 31IPT @ 6%36.00 Net to Insurers546.00

5. Deductions Section 2 of our risk EX12AAHO has been set up with the DNA Deduction to be applied after Client Discount (CLD) and therefore the result will be different from the normal type of calculation that you usually see. CONFIDENTIAL © Xchanging 2012, No part of this document may be circulated, quoted or reproduced without prior approval of Xchanging. 5 LevelSequenceAmount Gross Premium1,000.00Original Transaction Gross 11NCD @ 40%-400.00 Balance600.00Derived Transaction Gross 22Client Discount @ 7.5%-45.00 Balance555.00 23A Derived Nett Amount deduction5.55 Client Nett before IPT560.55 21Brokerage (Retained 15%-7.5%)-45.00 31IPT @ 6%36.00 Client Nett after IPT596.55 Net to Insurers551.55 The Derived Nett Amount deduction is 1% of the balance immediately before the calculation takes place. Therefore in this example the Balance at that point is 555.00

6. Deductions CONFIDENTIAL © Xchanging 2012, No part of this document may be circulated, quoted or reproduced without prior approval of Xchanging. 6 Section 3 of our risk EX12AAHO has been set up with the DNA Deduction to be applied before Client Discount (CLD) and therefore the result will be different from the normal type of calculation that you usually see. LevelSequence Gross Premium1,000.00Original Transaction Gross 11NCD @ 40%-400.00 Balance600.00Derived Transaction Gross 22A Derived Nett Amount deduction6.00 23Client Discount @ 7.5%-45.00 Client Nett Before IPT561.00 21Brokerage (Retained 15%-7.5%)-45.00 31IPT @ 6%36.00 Client Nett After IPT597.00 Net to Insurers552.00 The Derived Nett Amount deduction is 1% of the balance immediately before the calculation takes place. Therefore in this example the Balance at that point is 600.00