What is prudence factor in SAP FS-CM - Claims Management?

SAP Term: prudence factor

• Component: FS-CM

• Component Name: Claims Management

• Description: Factor that increases the sum insured, in the sense of a precaution, to exclude "slight underinsurance".

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• Key Concepts: 
  The prudence factor is a concept used in the FS-CM Claims Management component of SAP. It is a numerical value that is used to adjust the estimated cost of a claim to account for potential risks or uncertainties. The prudence factor is used to ensure that the estimated cost of a claim is accurate and that the company does not incur any unexpected costs.
  
  How to use it: 
  The prudence factor is used to adjust the estimated cost of a claim. The value of the prudence factor can be adjusted depending on the type of claim and the potential risks associated with it. The higher the prudence factor, the more conservative the estimated cost of a claim will be.
  
  Tips & Tricks: 
  When setting the prudence factor, it is important to consider all potential risks associated with a claim. This will help ensure that the estimated cost of a claim is accurate and that the company does not incur any unexpected costs.
  
  Related Information: 
  The prudence factor is related to other concepts such as risk management and cost estimation. Understanding these concepts can help companies better manage their claims and ensure that they are accurately estimating their costs.