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.

Table 1. Step 1 - Setup Time Period
Time Period

Name

Start

End

Calendar year 2020

2020-01-01

2020-12-31

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.

Table 2. Step 2 - Setup Deductible Parameter
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:

Table 3. Step 3 - Setup a Schedule Definition
Schedule Definition

Code

Description

Type

Premium Scope

Conditions

DC_DED

Deductible Discount

Adjustment

Product

-
Table 4. Step 3 - Setup a Schedule Dimensions
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.

Table 5. Step 4 - Setup Adjustment Rules
Adjustment Type

Code

Description

DC_DED

Deductible Discount
Table 6. Step 4 - Setup Adjustment Rules for New Adjustment Type
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.

Table 7. Step 5 - Assign the Adjustment
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.

1. An adjustment type is a schedule definition of Type Adjustment