Premium Calculation Terms and Definitions

Bond Duration Types

A bond duration type which is specified by a number of years, months, weeks, or days. This can be a fixed term or can have multiple selections from a Term type dropdown list created Reference Tables>Dropdown Lists/Create/Type/Term.
Bond terms that are based off a Term type dropdown are only able to be used with a premium rate definition.

A bond duration type which lasts for one year. Annual duration type bonds have yearly premium events. Prepaid years can be allowed, so the principal can pay for multiple years in advance and can have a discount applied (see multi-year discount in the modifiers section below).

A bond duration type which does not expire until cancelled. Premium for a continuous bond is collected at issuance.

A fixed rate sets a specific monetary premium value to the bond configuration. When using a fixed penalty amount, no calculations are made . When using a variable penalty amount, the amount given will be calculated per unit of penalty. This will only be for this specific bond configuration.

This imports a premium rate previously set up at Reference Tables/Premium Rates.

This imports a premium rate definition previously set up at Reference Tables/Premium Rate Definitions.

This is located at Maintain Bond/[Choose your bond]/Configuration/Term; this sets the minimum premium for this specific bond configuration for every premium event taken on this bond. If the premium is calculated below the bond minimum premium, the premium will be adjusted up to the bond minimum premium.

This is located at System Tables/Carriers/[Choose your carrier]/Edit/Minimum Premium. This sets the minimum premium for any bond configurations with this carrier. This is only taken into account for bond configurations with Annual Bond duration types.
If the carrier is set to an Annual premium type, the carrier minimum premium is applied for each year of the possible prepaid years. If the carrier is set to a Term premium type, the carrier minimum premium is applied for each premium event on the bond.

This determines a range in which the end user entering the bond application inputs their desired penalty amount within the range.

This sets a fixed amount for the penalty for this bond configuration.

This imports a list of penalty amounts from a Penalty type dropdown list. This dropdown list is created at Reference Tables/Dropdown Lists/Create/Type/Penalty.

This calculates the expiration of the bond to the last day of the month, a specific day of the month, a specific date, the applicant’s birthday, or as entered on the bond application. A bond’s premium will be prorated to the specified expiration if the bond does not meet its indicated term.
A minimum amount of days can be applied to push the expiration date past the specified date to the next occurrence of that specified date.

This calculates the expiration of the bond exactly as the term duration set on the bond.

These alter the rate from a bond configuration by a percentage. The rate is multiplied by the number given for that modifier, i.e. if the account rate modifier is .8 and the premium is $100, the result would be $80. These are managed and created at Reference Tables/Rate Modifiers.
The account rate modifier is applied to an account whenever it is created. The account application has a default account rate modifier for new accounts. This can be changed by doing an Update LOC action on an account.

On each individual account, there is an Account Rate Factor which has the same effect as an account rate modifier, but is specific only to that account.
If an account has an Account Rate Modifier and an Account Rate Factor, both will modify the rate.

When setting up rules, the results of the rules can modify the rate. If the rule(s) criteria is passed, the rate will be modified by the modifier value designated at the end of the rule criteria.

This value sets the percentage of discount given for purchasing multiple years for Annual duration type bonds. This discount is not applied for the first year, but is applied for any subsequent years.
If the carrier is set to an annual premium type, the multi-year discount can lower the premium below the carrier minimum premium. If the carrier minimum premium is set to a term premium type, the multi-year discount cannot lower the premium below the carrier minimum premium.