This calculator accurately calculates the unearned premium based on SEVEN input parameters by applying the actuarial reserving method. SIX out of SEVEN parameters can be found in the database and one required manual input from the end-user.

• Deployment
  • 1. Run directly on terminal
  • 2. Run as docker container
• Web Application
• RESTful API
  • Data format
  • Definition of Parameters
• Calculation Methodology
  • Summary
  • Start Day portion
  • Trip Duration portion
  • Lead Time portion

The service can be deployed directly via terminal or run as a docker container.

You must have python3.7 or above install. Other required packages can be acquired via:
pip install -r requirements.txt

To run the service:
python run.py

Build the docker image using the docker file provided in this repository by docker build -t <image name> .. Then simple run docker run -p <port to map>:5000 <image name>.

Go to your web browser and type in localhost:

The API take an input with a specific data format and return a json result. To achieve a batch processing, you may engage the API is a loop.
API url as follow: http://localhost:500/calculate_api
Example to post a request via python is in request.py.

The data must be in the the following structure:

{'policy_id'    : 'XXXXX'
 "premium"      : '192.72',
 "commission"   : '67.45', 
 'issue_date'   : 'yyyy-mm-dd',
 'start_date'   : 'yyyy-mm-dd',
 'end_date'     : 'yyyy-mm-dd',
 'request_date' : 'yyyy-mm-dd',
 'prd_grp_fin'  : 'Cancellation'}

1. premium - The original GWP/Premium charged to the policyholders/customers.
2. commission - The original Commission charged on the policy.
3. issue_date - The date when the policy is underwritten.
4. start_date - The initial start date of the trip/journey.
5. end_date - The expiry date of the policy or when the policy becomes ineffective.
6. request_date - The date in which refund begins to take effect a.k.a. cancellation request date.
7. prd_grp_fin - Segmentation information related to the product.
8. policy_id - The identifying id for the request policy. (This is for logging and debugging purpose)

All necessary function for calculation is in calculator.py.

When a policy is issued, the premium collected is earned on the term of the policy until it expired. The earning has a unique pattern according to the risk involved within the policy term.

The reserving actuary has come out with a unique earning pattern for each Product Group to reflect each homogenous segment. With this unique pattern, we can identify how much risk has expired or earned and how much is still in effect. When a refund is needed, we can safely refund the portion that hasn't expired or earned yet. Hence the proportion of refund is just 1-earned.

The earned calculation are made up of :

1. Start Day portion
2. Trip Duration portion
3. Lead time portion

The start day portion is a constant set by the reserving actuary as:

Trip duration portion can either be earned on a pro-rata linear scale or a log scale. The general rule of thumb is to use log scale when the trip duration is relatively long as compared to lead time; vice-versa on a linear scale when the trip duration is relatively short as compared to lead time. The exact threshold can be found in the calculator.py which follows the reserving document.

Lead time portion is calculated using a special formula:

where the coeficient n can be found in the documentation.