What is Index Linking?
Index Linking (IL) is the automatic adjustment of a sum insured applied at renewal in line with inflation or a fixed percentage to maintain adequate cover over time.

Original Sum Insured
£100,000
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Apply Index Link (5%)
(£100,000 × 5%)
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Increase = £5,000
│
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New Sum Insured = £105,000

Follow the steps below to add Index Linking into your Product. 

Step 1: Update the Question set

You will need some hidden questions to store data for your rating file to use for Index Linking.

The location for these questions depends on how your Product is set up:

The example below is for a MultiPage Product, in a SinglePage you wouldn't have the System ID prefix of  “MP_”

We are going to set up Index Linking for Buildings SI and Contents SI.

Questions Built into Question Set	Purpose of Question
	A heading for clarity on what the hidden questions relate to
	Used to check the current renewal month & year (the Record Inception Date)   We will populate this field with an answer in the format MMM-yy (e.g. Aug-25).
	This will be set in the rating file as a check to determine the last time the index linking has been applied.    This prevents Index Linking being applied to a sum insured more than once if the rates are updated on the matrix tab or via the Re-Run Rules button.
	This is where the IL % amount will be stored.   E.g. if the Buildings SI is to be ILed at 5%, a value of 5 will be stored here via the renewal rating file.     This step should be repeated for each additional SI to be index linked at renewal.
	Same function as above. We want to IL the Contents SI as well as the Buildings.    This step should be repeated for each additional SI to be index linked at renewal.

Step 2: Upload your Lookup File

A new file lookup will need to be created and uploaded. This should be created with a name of [Scheme Name] Index Linking – for example, Landlords Index Linking.

Note: If this file lookup ever needs to be updated AFTER being uploaded, it must be edited in Notepad or a similar Text Editor.

The lookup file should contain the following columns:

Column A - Month & Year in format Jun-26

Column B - Index Linking percentage to be applied for the corresponding month & year in column A

Column C – a repeat of column B for any additional sum insured questions which need to be index linked. In the example file lookup below, .

In this example of the lookup file below, we will be setting the hidden number field we added earlier (MP_BuildingsIndexLinking) with a value of 5 for a case starting in Aug-26:

Step 3: Update your Renewal Rating File

The Renewal rating file will need to be updated to store answers to our new hidden questions and apply the appropriate index linking percentage.

 Note: It is important that hidden questions are set early in the renewal rating file, prior to setting any rates against the revised sums insured.

The following is needed in your Renewal rating file:

1. This table will overwrite any date previously set in the MP_IndexLinkingDate hidden question. 

2. This table will set MP_IndexLinkingLastApplied and MP_IndexLinkingDate if it finds that it has never been ILed. e.g. at the very first renewal.

3. This table will check if Index linking as been applied in the last 10 to 26 months. If it hasn't, then we want to apply IL now. It sets both MP_IndexLinkingLastApplied and MP_IndexLinkingDate

4. This table will check if Index linking as been applied in the last 1 to 9 months. If it has, then we don't want to apply IL now. It sets MP_IndexLinkingDate to 0 and will make sure that our Buildings and Contents IL rate is also set to 0

5. Next we need to SetCoverFromLookup to populate the hidden Index Linking questions with the percentage to be applied, from the lookup file we uploaded earlier. We are only Index Linking Buildings and Contents, but if you had more, you would simply add more rows to this table in the same format.

6. Now we need to populate the Matrix with the current sum insured (before it has been index linked). Repeat this step for each additional sum insured. 

7. We will now override the answer we have just set with the index linking calculation. This formula will increase the amount shown in the Matrix, if index linking needs to be applied. If index linking does not need to be applied, this amount will remain the same. Here is the formula you can copy (using your own System IDs):
   FLOOR([MP_MainBuildingPremium_Cover]*(([MP_BuildingsIndexLinking_Cover]/100)+1))

8. Finally we need to update the answer in the MP question set (money question type) with the new (index linked) sum insured. This step needs to be repeated for any additional sums insured to be index linked. 

Step 4: Test

Make sure you test your updates rating file by getting a renewal quote. You´ll be able to see if your hidden questions are populated and if the correct values have been pulled through to your matrix tab.