Implement Risk-Adjusted Premium Calculation Service

[Oluwaseyi89]

Description

Implement a sophisticated risk-adjusted premium calculation service that dynamically computes insurance premiums based on comprehensive risk assessment data. This internal service will integrate with the risk-analytics-service for user risk profiling and the on-chain-service for real-time blockchain data, providing accurate, data-driven premium pricing during the underwriting process.

Technical Scope

Core Premium Calculation Modules:

1. Risk Factor Integration:

   • Integration with risk-analytics-service for user risk profiles
   • Real-time risk score consumption and interpretation
   • Multi-factor risk assessment aggregation
   • Risk category weighting and normalization

2. Policy Parameter Analysis:

   • Coverage amount impact on premium calculation
   • Duration-based pricing models
   • Sum insured risk exposure calculations
   • Policy type-specific pricing algorithms

3. Dynamic Adjustment Engine:

   • Claims history-based premium adjustments
   • Real-time market condition factor integration
   • Behavioral risk factor incorporation
   • Temporal risk trend analysis

4. Internal API Service:

   • RESTful internal endpoints for premium calculation
   • Real-time premium quotation generation
   • Batch premium calculation capabilities
   • Comprehensive logging and audit trails

Key Requirements:

• Real-time integration with risk-analytics-service API
• On-chain data consumption from on-chain-service
• Dynamic, data-driven premium adjustments
• High-performance calculation engine
• Comprehensive audit trails for pricing decisions
• Configurable pricing models and algorithms

Acceptance Criteria

• Full premium service implementation including:

  • Successful integration with risk-analytics-service
  • Accurate on-chain data consumption and processing
  • Dynamic premium calculation with multiple risk factors
  • Functional internal API endpoints

• Integration Requirements:

  • Seamless integration with risk-analytics-service API
  • Real-time data consumption from on-chain-service
  • Compatibility with policy underwriting workflow
  • Support for both synchronous and asynchronous calculations

• Performance Requirements:

  • Premium calculation response under 500ms
  • Support for 100+ concurrent calculation requests
  • Efficient caching of frequently used risk data
  • Scalable architecture for increasing calculation load

• Accuracy Requirements:

  • Consistent premium calculations across identical inputs
  • Proper risk factor weighting and normalization
  • Accurate dynamic adjustments based on claims history
  • Compliance with actuarial principles and regulations

Technical Specifications

API Integration Points:

// Risk Analytics Service Integration
$riskProfile = Http::get('http://risk-analytics-service:5001/api/risk-profiles/{userId}');

// On-Chain Service Integration  
$onChainData = Http::get('http://on-chain-service:5003/api/on-chain-data/{address}');

// Internal Premium API Endpoint
Route::post('/api/internal/premium/calculate', [PremiumController::class, 'calculate']);

---

Premium Calculation Algorithm:*

class PremiumCalculator
{
    public function calculatePremium(RiskProfile $riskProfile, PolicyParameters $params): PremiumQuote
    {
        $basePremium = $this->calculateBasePremium($params);
        $riskFactor = $this->calculateRiskFactor($riskProfile);
        $dynamicAdjustment = $this->calculateDynamicAdjustment($params);
        
        return new PremiumQuote(
            amount: $basePremium * $riskFactor * $dynamicAdjustment,
            components: [
                'base_premium' => $basePremium,
                'risk_factor' => $riskFactor,
                'dynamic_adjustment' => $dynamicAdjustment
            ]
        );
    }
}

---

Internal API Endpoints:

• POST /api/internal/premium/calculate - Calculate premium for given parameters
• GET /api/internal/premium/quote/{quoteId} - Retrieve calculated premium quote
• POST /api/internal/premium/batch-calculate - Batch premium calculation
• GET /api/internal/premium/factors - List available risk factors

Security Considerations

• Secure internal API authentication and authorization
• Validation of all input parameters and risk data
• Audit logging for all premium calculations
• Compliance with insurance pricing regulations
• Data encryption for sensitive pricing algorithms
• Rate limiting to prevent service abuse

Performance Considerations

• Efficient caching of risk profiles and calculation results
• Optimized database queries for historical data access
• Connection pooling for external service integrations
• Load balancing for high-volume calculation requests
• Async processing for complex calculation scenarios

Integration Dependencies

• Risk-Analytics-Service: User risk profiles and scoring
• On-Chain-Service: Real-time blockchain data and metrics
• Policy Service: Policy parameters and underwriting context
• Claim Service: Historical claims data for adjustments

Branch & Commit

• Branch: feat/premium-calculation-service
• Commit: feat: implement risk-adjusted premium calculation service with external integrations

⏳ Estimated Time: 2 Days