Premium Calculation - SME Package¶

Pricing Methods¶

Method 1: Simplified Thresholds (Current Business Practice)¶

For standard SME Package policies, the following maximum thresholds apply before underwriter referral:

Section	Maximum Sum Insured (Auto-Approve)
PAR & BI (Sections 01, 02)	Below AED 2,000,000
Public Liability (Section 07)	Below AED 2,000,000
Workmen Compensation (Section 08)	Estimated wages below AED 250,000
Fidelity Guarantee (Section 04)	Below AED 500,000
Money (Section 03)	Below AED 500,000

Application: - If ALL sections are within thresholds = Standard rating applies - If ANY section exceeds threshold = Underwriter referral required - Quick pricing for small to medium businesses

Above Threshold Requirements: - Detailed risk assessment per section - Business documentation review - Custom rating factors applied - Underwriter approval needed

Method 2: Detailed Rating Method¶

Based on 77 policies with calculable rates from Premia UAT database.

Product 1061 - SME Package¶

Metric	Value
Minimum Rate	0.024%
Maximum Rate	0.60%
Average Rate	0.097%
Median Rate	0.077%
Sample Size	77 policies

Note: SME Package has the lowest average rate (0.077% median) among all general insurance products due to high aggregate sum insured across 8 sections.

Premium Calculation Methodology¶

SME Package uses section-by-section rating with aggregate premium:

Section 01 Premium = Property SI × Property Rate
Section 02 Premium = BI SI × BI Rate
Section 03 Premium = Money SI × Money Rate
Section 04 Premium = Fidelity SI × Fidelity Rate
Section 05 Premium = Machinery SI × Machinery Rate
Section 06 Premium = Electronics SI × Electronics Rate
Section 07 Premium = Liability SI × Liability Rate
Section 08 Premium = PA SI × PA Rate

Total Base Premium = Sum of all section premiums
Final Premium = Base Premium + Loadings - Discounts

Section-by-Section Premium Analysis¶

Section 01: Property Damage¶

Contents (10610101) - Average SI: AED 255,538 - Average Premium: AED 751 - Effective Rate: ~0.29%

Stock (10610103) - Average SI: AED 193,229 - Average Premium: AED 176 - Effective Rate: ~0.09%

Section 03: Money¶

Money in Transit (10610301) - Average SI: AED 61,235 - Average Premium: AED 39 - Effective Rate: ~0.06%

Money in Premises (10610302) - Average SI: AED 15,366 - Average Premium: AED 9 - Effective Rate: ~0.06%

Money in Safe (10610303) - Average SI: AED 13,072 - Average Premium: AED 13 - Effective Rate: ~0.10%

Section 07: Public Liability (Highest Premium)¶

Public Liability (10610703) - Average SI: AED 2,063,953 - Average Premium: AED 837 - Effective Rate: ~0.04% - Key Section: Highest absolute premium despite low rate

Section 08: Personal Accident¶

Death Cover (10610801) - Average SI: AED 29,782 - Average Premium: AED 109 - Effective Rate: ~0.37%

Permanent Disablement (10610802) - Average SI: AED 5,882 - Average Premium: AED 75 - Effective Rate: ~1.28%

Section 02: Business Interruption¶

Annual Gross Income (10610201) - Average SI: AED 171,429 - Average Premium: AED 226 - Effective Rate: ~0.13%

Loss of Profit (10610201) - Average SI: AED 2,326,667 - Average Premium: AED 1,334 - Effective Rate: ~0.06%

Section 04: Fidelity Guarantee¶

Fidelity (10610401) - Average SI: AED 55,303 - Average Premium: AED 128 - Effective Rate: ~0.23%

Section 05: Machinery Breakdown¶

Machinery (10610501) - Average SI: AED 8,929 - Average Premium: AED 22 - Effective Rate: ~0.25%

Section 06: Electronic Equipment¶

Electronics (10610601) - Average SI: AED 3,431 - Average Premium: AED 40 - Effective Rate: ~1.17%

Medical Coverage Pricing (Products 7038, 7040)¶

Per-Employee Premium Model¶

Medical products use per-employee pricing rather than percentage-based:

Product 7038 - In-patient - Average Premium: AED 113,272 per policy - Pricing: Based on number of employees covered - Not percentage-based

Product 7040 - Alternative Medical - Average Premium: AED 111,545 per policy - Similar per-employee structure

Typical Premium Build-Up Example¶

Small Retail Shop¶

Section 01 - Contents (AED 200,000 @ 0.30%) = AED 600
Section 01 - Stock (AED 150,000 @ 0.10%) = AED 150
Section 03 - Money in Transit (AED 50,000 @ 0.06%) = AED 30
Section 03 - Money in Premises (AED 20,000 @ 0.06%) = AED 12
Section 03 - Money in Safe (AED 10,000 @ 0.10%) = AED 10
Section 07 - Public Liability (AED 1,000,000 @ 0.05%) = AED 500
Section 08 - PA for 5 employees (@ AED 50 each) = AED 250
------------------------------------------------------------
Base Premium = AED 1,552
Loading (if applicable) = AED 150
Discount (good risk) = -AED 100
------------------------------------------------------------
Final Premium = AED 1,602

Rating Factors¶

1. Business Type¶

Low risk: Offices, IT companies (lower rates)
Medium risk: Retail, restaurants (standard rates)
High risk: Manufacturing, workshops (higher rates)

2. Location¶

Prime commercial areas: Lower rates
Industrial areas: Higher rates
High-risk zones: Additional loading

3. Security Measures¶

Alarm systems: Discount
CCTV: Discount
Security guards: Discount
Fire systems: Discount

4. Claims History¶

Claims-free: Up to 20% discount
Previous claims: Loading applied
Multiple claims: Significant loading

5. Sum Insured Adequacy¶

Under-insurance: Pro-rata claims settlement
Adequate coverage: Full claims payment
Over-insurance: Premium wastage

Loadings and Discounts¶

Loadings¶

General Loading (2001): 67 policies, avg AED 27,165
Very significant loading on SME package
Applied for high-risk businesses or locations

Discounts¶

General Discount (10610901): 43 policies
Fixed Discount (10610903): 43 policies
Typically 10-20% for good risks

Premium Comparison with Other Products¶

Product	Avg Rate	Avg Premium	Basis
SME Package (1061)	0.077%	AED 3,004	Multi-section aggregate
General TPL (5010)	0.15%	AED 2,483	Single liability cover
WC (5030)	0.93%	AED 2,098	Wages-based
Professional Indemnity (5050)	0.38%	Variable	SI-based

SME Package offers best value with multiple sections at lowest overall rate.

PL/SQL Packages¶

Premium calculation likely handled by: - PGIPK_CALC_PREMIUM_* - Section-wise calculation - PGIPK_SME_* - SME-specific rating (if exists) - AIGPK_VAL_* - Validation packages - Rating tables for each section

Database Fields¶

Premium stored in: - PGIT_POLICY.POL_FC_PREM - Total policy premium - PGIT_POL_SECTION.PS_FC_PREM - Section-wise premium - PGIT_POL_RISK_COVER.PRC_FC_PREM - Coverage-level premium - PGIT_POL_RISK_ADDL_INFO - Sum insured by section

Integration Considerations¶

When implementing SME premium calculation:

Section Selection
User selects required sections
Each section has independent SI
Calculate premium per section
Rating Application
Apply section-specific rates
Consider business type modifiers
Apply location factors
Aggregation
Sum all section premiums
Apply package discount (if any)
Add loadings or discounts
Calculate final premium
Medical Add-on (Optional)
Separate calculation
Per-employee pricing
Added to package premium

Data Source: Analysis of 77 SME Package policies (product 1061) from Premia UAT database. Section-based rating with aggregate premium calculation.

Next Steps¶

Quote Requirements - Documents needed
Endorsements - Mid-term changes
Commission - Broker compensation