Can we always rate only from the current slice forward?

Some customers ask why they cannot always rate only from the date of change and later slices in effective time.

The rating engine must know that if a policy change happens as of a given date, then no changes can happen that affect pricing prior to that date. For most lines of business, the PolicyCenter user interface enforces this requirement.

However, worker’s compensation and general liability policy changes allow changes that take effect at earlier effective dates. Workers’ compensation rating is very different from standard lines, and heavily uses window mode costs. This is true about many fields in worker’s compensation. Similarly, for general liability, these types of changes are possible for the exposure (location / class code) rows.

If backdated policy changes are possible, the only safe way to rate the period is to re-rate the entire period. In other words, if anything could have changed that affects the earlier part of the period (or the whole period), you cannot simply rate from the current date slice forward.

If backdated policy changes are impossible, it is safe to rate only from the current slice date. For normal in-sequence changes, this means just considering one slice date.

For out-of-sequence changes, PolicyCenter requires the rating engine to rate two or more slices.

Each line-specific rating engine can indicate that the current job can rate only from the current slice forward or whether it must re-rate the whole period. This flag is dynamic, and can you can override this calculation to use custom rules for existing lines of business or for new lines of business.

Choosing to rate from the change date forward is a performance optimization compared to rating the whole policy from the period start date. Even if you choose to use this optimization, PolicyCenter in some cases still rates the whole policy from the period start date, for example for a cancellation. Design your code to ensure that if PolicyCenter rates the entire period or from the change date, the rating engine always returns the same consistent cost values.