Pricing for rating in visualized product
The price of a policy is the sum of all premiums, taxes and other charges. In PolicyCenter, costs are the individual components that determine the price. In simple terms, the amount of a cost is calculated by applying a rate to a basis. As you develop your product, the rate is ultimately calculated by the rating engine. You can enter the rate in a policy transaction and see how the rate affects the policy premium. After the product is generated, you must recreate the rates and the basis in the rate books that calculate the policy premium.
- Exposure to risk is defined by the coverage. The premium is calculated by applying a rate to an attribute of the coverage, such as sum insured.
- Exposure to risk is defined by something other than the coverage. For example, liability coverage is provided up to a limit of $50 million, but the exposure to risk is the size of the business measured by classes of turnover. A cost is added and a rate supplied for each exposure of revenue.
- The premium is calculated from a base premium amount rather than some numeric value. In this case, there is no basis and the rate is simply the premium (the basis is one).
Advanced Product Designer can also visualize costs that are calculated from other costs. This may be related premiums. For example, business interruption premiums that are calculated from underlying material damage premiums, or more commonly, taxes and charges that are applied to premiums.
Recreate pricing information in visualized product
When you import a mind map, Pricing markers and their relationships are dropped. You can use the pricing relationships from the mind map as a guide to adding pricing information to your visualized product.
You can define pricing details in the Pricing screen in the Product Definition screen or in a submission or other policy transaction. Define the parameters and rates to be considered during the rating process for the associated lines and risk objects.
Rating integration
Product generation creates a rating framework for your product. Based on the costs added to each risk object or coverage in the Pricing screen during visualization, corresponding CostData objects and Cost entities are created by product generation. You must recreate the basis.
For example, a location has three coverage costs and one cost on the location (Other Costs) on the Pricing tab of the Location Risk Object Definition popup.
| Location Risk Object Definition popup | ||
|---|---|---|
| Pricing tab | ||
| Coverage Costs | ||
| Name | Cost Type | Debt Type |
| Equipment Breakdown Protection | ||
| Premium | Standard premium | Premium, inc. Tax |
| VAT | Tax or surcharge | Premium, inc. Tax |
| Fire Department Services | ||
| GST | Tax or surcharge | Premium, inc. Tax |
| Other Costs | ||
| Name | Cost Type | |
| IPT | Tax or surcharge | Premium, inc. Tax |
Product generation creates three costs for the Location coverage costs (Premium, VAT, and
GST). It also creates an XXLocationCovCostData class and
an XXLocationCovCost entity for the risk object
(location).
One cost is created for the Location risk object cost (IPT), with an
XXLocationCostData class and an
XXLocationCost entity for this cost.
A RatingEngine class is also generated. You must implement the rateSlice method in this class.