Property Reinstatement Value — Inflation Uplift
Adjusting the sum insured and premium upward mid-term for construction cost inflation.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Premium Receivable (Uplift) | Asset (+) | 240.00 | - |
| Written Premium — Property Uplift | Revenue (+) | - | 240.00 |
💡 Accountant's Note
Rising construction costs mean buildings become underinsured if sums insured are not indexed. Automatic indexing clauses generate additional mid-term premium that is recognized over the remaining policy period.
Practitioner & Systems Framework
💻 ERP Architecture
Automatic indexation clauses are configured in the policy admin system to apply an index (typically a construction cost index) to the sum insured at each policy anniversary or mid-term review. The uplift premium is generated as an automatic endorsement, calculated as the additional premium on the increased sum insured for the remaining policy period (pro-rata). The insured should receive a revised policy schedule reflecting the updated sum insured and premium.
⚠️ Audit Flags
Auditors confirm that the index applied is consistent with the policy wording (the specific index referenced — e.g., Jordan Chamber of Construction and Building Contractors index). Verify that the indexation was applied to all qualifying policies and that the additional premium was collected. Test that the UPR is recalculated based on the total premium including the uplift. Review the portfolio for properties where the sum insured has not been indexed and may be significantly underinsured.
📄 Required Documentation
Policy wording confirming the indexation clause, index source and current index value, endorsement premium calculation, updated policy schedule with revised sum insured, and premium collection confirmation.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.