Premium Calculations
In Socotra, you specify premium and commission values at the peril level with the rating plugin or an external rater. Generally, you supply price values on an annualized basis, allowing Socotra to assign a specific price for the peril characteristic’s coverage segment in accordance with Socotra’s time scaling methodology.
If you wish to assign an exact price for a coverage segment yourself, bypassing Socotra’s scaling, you can do so by supplying an exact value for the premium, technical premium, or commission.
You may want to specify exact amounts for situations like these:
Charge a flat dollar amount in certain situations
Apply special requirements for premium amounts, such as rounding to the nearest dollar or nickel
Scale by a different method than months, such as by days, or “360 day years”, etc.
Calculate month durations differently than the default calculation
Have the persisted rate to be different from the effective rate, such as in rounding operations
The tables below summarize the effects of these properties:
Premium
Values supplied
Effect
yearlyPremium
yearlyPremiumis divided by 12 and stored on themonthPremiumproperty. Socotra scalesmonthPremiumto obtain a premium value for the segment, which is persisted aspremium.
exactPremium
exactPremiumis rounded and stored aspremium. Socotra scales exactPremium to obtain a month premium value, which is persisted tomonthPremium.
yearlyPremiumandexactPremium
exactPremiumis rounded and stored aspremium.yearlyPremiumis divided by 12 and stored asmonthPremium.
Technical premium values (yearlyTechnicalPremium, exactTechnicalPremium) behave the same way.
Note
You can mix how each peril characteristics object is handled. For example, you could set exactPremium for one and yearlyPremium for another, and both for a third.
Commission
Values supplied
Effect
yearlyAmount
yearlyAmountis divided by 12 and stored on theamountproperty.
exactAmount
exactAmountis rounded and stored asamount.
yearlyAmountandexactAmount
exactAmountis rounded and stored asamount;yearlyAmountis ignored.