What is 'penalty endorsement factor' in SAP FS-PM - Policy Management?

penalty endorsement factor - Overview

• Component: FS-PM

• Component Name: Policy Management

• Description: The percentage factor that is applied to the provisional premium instead of a regular reported value settlement in certain insurance products typically for liability insurance, where no reported value settlement is possible because the policyholder has not reported any values.

penalty endorsement factor - Details

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  Key Concepts: 
  The Penalty Endorsement Factor (PEF) is a component of the SAP FS-PM Policy Management module. It is used to calculate the penalty amount for a policyholder when they fail to pay their premiums on time. The PEF is calculated based on the policyholder's risk profile and the amount of time that has passed since the premium was due. 
  
  How to use it: 
  The PEF is used to calculate the penalty amount for a policyholder when they fail to pay their premiums on time. The PEF is calculated based on the policyholder's risk profile and the amount of time that has passed since the premium was due. The PEF can be adjusted by the insurer to reflect their desired level of risk tolerance. 
  
  Tips & Tricks: 
  When setting up the PEF, it is important to consider the policyholder's risk profile and adjust the PEF accordingly. It is also important to consider how long it has been since the premium was due, as this will affect the penalty amount. 
  
  Related Information: 
  The Penalty Endorsement Factor is just one component of SAP FS-PM Policy Management. Other components include premium calculation, policy renewal, and claims processing. Understanding how these components work together can help insurers better manage their policies and ensure that policyholders are paying their premiums on time.