Credit Protection Insurance Setups

4. Global Loan Protection Module (GLP)

The Global Loan Protection (GLP) module provides comprehensive credit protection insurance functionalities within MAXMONEY. This section details the necessary one-off setups for the module.

4.1 Security

Configuring security settings is crucial to control access to GLP functionalities.

4.1.1 Roles

To grant users access to GLP features and setups, link the following resources to their respective roles:

• Navigate to: MaxMoney > Setups > Security > Roles > Edit

  SETUPS Resources:

  • Global Loan Protection Setup: Allows a user to perform general setup configurations for Global Loan Protection.

  • Global Loan Protection Setup - General: Provides access for the user to set up the default GLP Product.

  REPORT Resources:

  • GLP Premium Receipt Report: Grants access to a report listing receipts related to loans with GLP.

  • GLP Loan List Report: Grants access to a report listing loans that have GLP enabled.

  LOAN Resources:

  • Global Loan Protection Edit: Allows users to change the GLP product from a predefined list on a loan.

  • Global Loan Protection Waived: Allows users to modify the "waived" checkbox for GLP on a loan.

4.1.2 Users

Once roles are configured, ensure that users are linked to the appropriate roles that contain the necessary GLP resources.

• Navigate to: MaxMoney > Setups > Security > Users > Edit

• Action: Link the user to the relevant role.

4.2 User Access to Products

Control which users can access and manage specific GLP products.

4.2.1 Users

• Granting Product Access: Give specific users access to individual GLP products.

  • Navigate to: MaxMoney > Setups > Global Loan Protection.

  • Action: Edit each product and select the users who are permitted access to it.

4.2.2 Standard Initial Product

Set up the default GLP product that will be automatically applied to new loans.

• Navigate to: MaxMoney > Setups > Global Loan Protection - General.

• Examples of Initial Products:

  • ASPIS: ASPIS Credit Life 0.45%

4.3 Accounting

Proper accounting configurations are essential for GLP premium management.

4.3.1 Ledgers

A dedicated ledger must be set up for each GLP product to track financial movements.

• Navigate to: Setup > Accounting > Ledgers.

• Configuration: If Value Added Tax (VAT) is applicable, select VAT Type = Output to enable VAT calculation for the ledger.

• Example: CPI GLP Example

4.3.2 Events

An accounting event must be configured to record GLP charges.

• Navigate to: Setup > Accounting > Events.

• Configuration:

  • Set the attribute for Global Loan Protection Charged to Loan Insurance Charged.

  • If VAT is applicable, select the VAT Applicable checkbox to enable VAT calculation for this event.

• Example: CPI GLP Example

4.3.3 VAT Percentage

If VAT is applicable, ensure the correct VAT percentage is set in the general accounting settings.

• Navigate to: Setups > Accounting > General.

4.4 Document Setup

The loan agreement and associated documents must be configured to display GLP details.

• Loan Agreement Adjustment: The loan agreement document must be updated to include the breakdown of the cost of credit, specifically detailing the Credit Life Insurance as configured in the GLP module.

• GLP Tokens: The specific tokens for integrating GLP data into documents can be found in the Global Loan Protection Document Group.

• Insurance Document Generation: The insurance document is pre-configured in MAXADMIN and will be automatically generated alongside the loan agreement documents upon loan creation.

5. MaxMoney Procedure (for GLP)

This section outlines the operational procedures for using the Global Loan Protection module during loan processing.

5.1 Create a New Loan

When creating a new loan, the system dynamically presents valid GLP products.

• Product Display: Global Loan Protection Products displayed will be filtered based on:

  • The borrower’s age.

  • The user’s access rights (as configured in section 4.2.1).

• Waiver Option: GLP can be waived if a valid reason is provided.

• Premium Calculation: The insurance percentage or incremental setup values will be displayed on the Interest and Fees page of the loan, according to the selected product's setup.

• Insurance Premium Calculation Rules: The insurance premium is calculated based on the product's setup parameters, including:

  • Basis: On the capital, capital plus fees, or loan total.

  • Rate Type: Rate-based or incremental.

  • Period Basis:

    • Pro rata: Calculates the premium based on the exact number of days for the first and final calendar months of the loan. This accounts for the loan agreement date and the instalment payment date.

    • Full month: Calculates the premium for the entire month.

  • Number of Months: Calculated based on the period between the loan agreement date and the final instalment date. Note that for an extended loan over 3 months with 1 instalment, the premium will be calculated for 3 months.

• Inclusion in Loan: The calculated insurance premium will be incorporated into both the Loan Total and the Instalment Amount.

• Document Generation: All relevant documents, including the insurance document, will be generated automatically when the loan is created.

5.2 Edit a Loan

You can view and manage GLP details for existing loans.

• Navigate to: MAXMONEY - Client Administration - Search for a Client - Loans - Edit Loan.

• GLP Tab: Go to the Global Loan Protection tab to view the following details:

  • GLP Service Provider: The insurance company.

  • GLP Product: The specific insurance product.

  • Policy Start Date: Equivalent to the Loan Agreement Date.

  • Policy End Date: Equivalent to the Final Instalment Date.

  • GLP Status: Refer to section 5.2.2 for status definitions.

  • Payment Allocation Sent: Refer to section 5.2.1 for details.

  • Insurance Premium: The calculated premium for a full month.

  • GLP First Premium: Premium amount for the first calendar month. This amount will be 0.00 if the loan agreement date's calendar month is the same as the final instalment date's calendar month.

  • GLP Final Premium: Premium amount for the final calendar month.

  • Total Premium (incl VAT): Sum of all premiums for the loan, including VAT.

  • Total Premium (excl VAT): Sum of all premiums for the loan, excluding VAT.

5.2.1 Payment Allocation

• Payment Allocation Sent: This field displays "selected" if a successful instruction has been sent to the payment house. This instruction directs the payment house to transfer the insurance premium instalment portion to the insurer's account upon successful receipt of the loan instalment.

• Further Information: Consult the "OPS Procedure MAXMONEY ALLPS Payment Allocation for Insurance" document for more details.

• Limitations: This feature is limited to specific service providers, and only one Payment Allocation instruction per loan is currently allowed.

• Troubleshooting Note: An 3045 error in the XML output is often caused by invalid (invisible) characters in the setup of the AET account.

5.2.2 GLP Status

The GLP Status indicates the current state of the insurance product on a loan.

• Pending: The default status when a new loan with GLP is created.

• Active: The status changes to "Active" when the associated loan status changes to "Active".

• Claim In Process: User can manually set this status when an insurance claim is initiated.

• Claim Completed: User can manually set this status when an insurance claim is finalized.

• Expired: User can manually set this status when the policy term has ended.

• Lapsed: User can manually set this status when the policy is no longer active due to non-payment or other reasons.

• Reinstated: User can manually set this status when a lapsed policy is reactivated.

5.3 Record Transaction

GLP premiums are automatically managed and recorded within the accounting system.

5.3.1 Charges

• Automatic Charging: Global loan protection premiums are automatically charged either during month-end processing or upon receipt of a (final) payment.

• Bookkeeping Entry: A double entry is created in the bookkeeping system, debiting the debtor's account and crediting the insurance charge ledger.

• Loan Transaction View: The insurance charge debited to the debtor can be viewed in the loan's transaction view.

• Charging Period: The monthly insurance premium is charged per calendar month throughout the duration of the loan agreement.

• Exclusions from Charging:

  • Insurance will not be charged if the loan's “Do not Charge Fees and Interest” checkbox is selected.

  • Insurance will not (continue to) be charged if the loan status is anything other than Active or Non-Performing.

  • Insurance will not be charged after the final payment date.

• Microlender Responsibilities:

  • If a loan is in arrears, it is the microlender’s responsibility to claim from the insurer in accordance with their agreement and to receipt the claimed amount.

  • It is also the microlender’s responsibility to remit monthly insurance premiums to the insurer promptly, as per their agreement.

• Calculation Parameters: Insurance charges and calculations are performed strictly according to predetermined rules and are limited to the parameters defined in the GLP setup.

5.3.3 Cancellation

• Charge Reversal: When a loan is cancelled, any associated GLP charges will be automatically reversed.

5.4 Reporting

GLP-specific reports are available to monitor insurance premiums and related activities.

• Availability: Reports are available from release 13.7 (November 15, 2022).

• Access:

  • Navigate to: Reporting - Insurance - Global Loan Protection Premium Receipt Report.

• Functionality: This report operates similarly to the Credit Protection Insurance Premium Receipt Report.

• Further Documentation: Refer to the "Insurance Report - Ops MaxMoney GLP Premium Receipt Report" document for detailed information.

6. FAQ / Troubleshooting

This section addresses common questions and troubleshooting tips related to the GLP module.

6.1 MaxMoney Error

If you encounter errors after enabling the GLP module:

• Initial Check: Double-check all setups for the GLP module for any misconfigurations.

• Event Attribute Check:

  • Verify that an event with the attribute “Loan Insurance Charged” exists in your accounting setup.

  • Confirm that only one such event exists. Multiple events with this attribute can cause conflicts.

6.2 ASPIS

6.2.1 How does the calculation work?

The credit life calculation spans from the loan distribution date to the contracted date of the final instalment.

Dummy Example (for illustrative purposes only):

• Loan Amount: R900

• Initiation Fee: R155.25 (R135 + VAT R20.25)

• Principal Debt: R1055.25

• Loan Agreement Date: 2022/04/28

• Insurance Product: 0.55%; pro-rata for first and final calendar months.

• Total Insurance Premium: R22.55

• Cover Period: 2022/04/28 to 2022/08/25 (April to August)

Monthly Premium Breakdown:

• April Premium: R0.38 (Calculated as: ROUND(2 days * (1055.25 * 0.55%) * 12 months / 365 days))

• May Premium: R5.80 (Calculated as: ROUND(1055.25 * 0.55%))

• June Premium: R5.80

• July Premium: R5.80

• August Premium: R4.77 (Calculated as: ROUND(25 days * (1055.25 * 0.55%) * 12 months / 365 days))

Instalment and Premium Split (Example with Two Payments):

• Loan Total: R1480.03

• Instalment 1: R740.02 (due 2022/07/25). Split premium amount: R11.28 (ROUND(22.55 / 2))

• Instalment 2: R740.01 (due 2022/08/25). Split premium amount: R11.28

Early Payment Example:

• Suppose the borrower pays R700 in cash on 2022/05/25.

• The premium portion reflected on the Receipt report for 2022/05/25 will be: R10.67 (ROUND(700 * 22.55 / 1480.03))

Rounding: All rounding is performed to two decimal places.