DECIMAL PLACES

Dear Mr. Old Man,

Good afternoon, today I have a short question about amount insured.

According to para. K13, ISBP 745, “There is no requirement for insurance coverage to be calculated to more than two decimal places”.  So, if amount of cover calculated is USD 100,000.156789, the amount should be shown in the insurance document is USD 100,000.16 or only USD 100,000.15. I mean, are there normally rounding number rules applied in this case?

By the way, I wonder is there any rounding numbers rules is acknowledged over the world? Please give me your answer.

I hope to receive your reply soon.

Thank you and best regards,

Nguyen Quynh Nga

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ANSWER

Hi,

There is no discrepancy in respect of either case, i.e., USD 100,000.16 or USD 100,000.15 is acceptable. It is insurance industry practice that insurance documents will evidence coverage to a maximum of two decimal places. Calculation to two decimal places represents international standard banking practice.

The common rule of rounding number is as follows:

If number is equal or greater than 5, round up.

If number is equal or lower than 4, round down.

Kind regards,

Mr. Old Man