Apply a Deductible Range Discount
This example shows the configuration of an adjustment rule that reduces the base premium based on the deductible. In this example, the system does not pick the discount out of a list of discrete deductible amounts. It is the result of a continuous function instead, for example because it is determined as a percentage of the policyholder’s income. This means that to set up the adjustment rules based on ranges, rather than discrete values for the deductible.
Step 1 - Setup Time Period
The first step is to set up the time period that governs the 'condition' columns on the adjustment rule. In this example, the conditions are the 'from' and 'trough' columns for the deductible.
Time Period | ||
---|---|---|
Name |
Start |
End |
Calendar year 2020 |
01-01-2020 |
12-31-2020 |
More time periods can be set up later, for example, to specify that the boundaries for the ranges are different in calendar year 2021.
Step 2 - Setup Deductible Parameter
The second step is to set up the deductible parameter. This parameter becomes available in the adjustment rule. At the same time it becomes available as a setting on the policy enrollment product, so it will be possible to store the deductible.
Parameter Alias | ||
---|---|---|
Code |
Display name |
Type |
DEDUCT |
Deductible |
Amount |
Step 3 - Setup a Schedule Definition
The next step is to set up a schedule definition. This schedule definition controls which columns the adjustment rule shows in addition to the columns for the value and value type. To add a column for the deductible, add a single dimension, that uses a range:
Schedule Definition | ||||
---|---|---|---|---|
Code |
Description |
Type |
Premium Scope |
Conditions |
DC_DED |
Deductible Discount |
Adjustment |
Product |
- |
Schedule Dimensions | ||||||
---|---|---|---|---|---|---|
Header |
Seq |
Width |
Type |
Parameter |
Dyn Field |
Usage |
Deductible |
1 |
10 |
Parameter |
DEDUCT |
- |
Range |
Now that the schedule definition has been created, a new adjustment type has become available. Because the 'Deductible' dimension has been set up as a range, it’s possible to set a 'from' and a 'through' value.
Step 4 - Setup Adjustment Rules
Now the schedule definition has been created, a new adjustment type [1] has become available.
The next step is to set up adjustment rules for this new adjustment type.
Adjustment Type | |
---|---|
Code |
Description |
DC_DED |
Deductible Discount |
Adjustment Rules | |||
---|---|---|---|
Deductible (range) |
Deductible Curr. |
Adjustment |
|
500.01 |
1,000.00 |
USD |
-5 % |
1,000.01 |
1,500.00 |
USD |
-10 % |
1,500.01 |
2,000.00 |
USD |
-13 % |
2,000.01 |
- |
USD |
-15 % |
This configuration means that there is no discount for deductibles of 500.00 or less and that a deductible higher than 2,000.00 results in a 15% discount, no matter how high it actually is. The adjustment is a discount, therefore the percentage has a negative sign.
Step 5 - Assign the Adjustment
The adjustment rule configuration is now complete, but it won’t be applied in the premium calculation until it is attached to an enrollment product or, in case of a group adjustment, group account product, group account or group client . To complete the example, set up an enrollment product and link it to the adjustment type that we’ve created.
Enrollment Product | |
---|---|
Code |
Assigned Premium Schedules |
DEDUC PLAN |
DC_DED |
Step 6 - Link the Adjustment to the Enrollment Product
When assigning multiple adjustments, specify the sequence in which the different adjsutments are calculated. This is especially relevant for adjustments that are based on a percentage. More information on how adjustment rules are evaluated during premium calculation can be found in Calculate Premium.