@etherisc/gif-next 0.0.2-9b7f7f5-445 → 0.0.2-9bed517-659

package/contracts/product/PolicyService.sol

@@ -1,6 +1,8 @@
 // SPDX-License-Identifier: Apache-2.0
 pragma solidity ^0.8.20;
 
+import {IERC20Metadata} from "@openzeppelin/contracts/token/ERC20/extensions/IERC20Metadata.sol";
+
 import {IRegistry} from "../registry/IRegistry.sol";
 import {Product} from "./Product.sol";
 import {IComponents} from "../instance/module/IComponents.sol";
@@ -12,13 +14,14 @@ import {TokenHandler} from "../shared/TokenHandler.sol";
 import {Amount, AmountLib} from "../type/Amount.sol";
 import {Timestamp, TimestampLib, zeroTimestamp} from "../type/Timestamp.sol";
 import {ObjectType, APPLICATION, COMPONENT, DISTRIBUTION, PRODUCT, POOL, POLICY, BUNDLE, CLAIM, PRICE} from "../type/ObjectType.sol";
-import {APPLIED, COLLATERALIZED, ACTIVE, KEEP_STATE, CLOSED, DECLINED} from "../type/StateId.sol";
+import {APPLIED, COLLATERALIZED, KEEP_STATE, CLOSED, DECLINED, PAID} from "../type/StateId.sol";
 import {NftId, NftIdLib} from "../type/NftId.sol";
 import {ReferralId} from "../type/Referral.sol";
 import {StateId} from "../type/StateId.sol";
 import {VersionPart} from "../type/Version.sol";
 
 import {ComponentVerifyingService} from "../shared/ComponentVerifyingService.sol";
+import {ContractLib} from "../shared/ContractLib.sol";
 import {IApplicationService} from "./IApplicationService.sol";
 import {IBundleService} from "../pool/IBundleService.sol";
 import {IClaimService} from "./IClaimService.sol";
@@ -26,6 +29,7 @@ import {IComponentService} from "../shared/IComponentService.sol";
 import {IDistributionService} from "../distribution/IDistributionService.sol";
 import {InstanceReader} from "../instance/InstanceReader.sol";
 import {InstanceStore} from "../instance/InstanceStore.sol";
+import {IPolicyHolder} from "../shared/IPolicyHolder.sol";
 import {IPolicyService} from "./IPolicyService.sol";
 import {IPoolService} from "../pool/IPoolService.sol";
 import {IPricingService} from "./IPricingService.sol";
@@ -45,8 +49,6 @@ contract PolicyService is
     IPoolService internal _poolService;
     IPricingService internal _pricingService;
 
-    event LogProductServiceSender(address sender);
-
     function _initialize(
         address owner, 
         bytes memory data
@@ -56,12 +58,11 @@ contract PolicyService is
         initializer
     {
         (
-            address registryAddress,, 
-            //address managerAddress
+            address registryAddress,
             address authority
-        ) = abi.decode(data, (address, address, address));
+        ) = abi.decode(data, (address, address));
 
-        initializeService(registryAddress, authority, owner);
+        _initializeService(registryAddress, authority, owner);
 
         VersionPart majorVersion = getVersion().toMajorPart();
         _applicationService = IApplicationService(getRegistry().getServiceAddress(APPLICATION(), majorVersion));
@@ -72,22 +73,16 @@ contract PolicyService is
         _distributionService = IDistributionService(getRegistry().getServiceAddress(DISTRIBUTION(), majorVersion));
         _pricingService = IPricingService(getRegistry().getServiceAddress(PRICE(), majorVersion));
 
-        registerInterface(type(IPolicyService).interfaceId);
+        _registerInterface(type(IPolicyService).interfaceId);
     }
 
 
-    function _getAndVerifyInstanceAndProduct() internal view returns (Product product) {
-        IRegistry.ObjectInfo memory productInfo;
-        (, productInfo,) = _getAndVerifyActiveComponent(PRODUCT());
-        product = Product(productInfo.objectAddress);
-    }
-    
-
     function decline(
         NftId applicationNftId // = policyNftId
     )
         external
-        virtual override
+        virtual
+        nonReentrant()
     {
         (NftId productNftId,, IInstance instance) = _getAndVerifyActiveComponent(PRODUCT());
         InstanceReader instanceReader = instance.getInstanceReader();
@@ -115,16 +110,15 @@ contract PolicyService is
         emit LogPolicyServicePolicyDeclined(applicationNftId);
     }
 
-    event LogDebug(uint idx, string message);
 
-    /// @dev underwites application which includes the locking of the required collateral from the pool.
-    function collateralize(
+    /// @inheritdoc IPolicyService
+    function createPolicy(
         NftId applicationNftId, // = policyNftId
-        bool requirePremiumPayment,
         Timestamp activateAt
     )
         external 
-        virtual override
+        virtual
+        nonReentrant()
     {
         // check caller is registered product
         (NftId productNftId,, IInstance instance) = _getAndVerifyActiveComponent(PRODUCT());
@@ -144,13 +138,8 @@ contract PolicyService is
                 productNftId);
         }
         
-        StateId newPolicyState = COLLATERALIZED();
-
         // actual collateralizaion
-        (
-            Amount localCollateralAmount,
-            Amount totalCollateralAmount
-        ) = _poolService.lockCollateral(
+        _poolService.lockCollateral(
             instance,
             address(instanceReader.getComponentInfo(productNftId).token),
             productNftId,
@@ -160,39 +149,61 @@ contract PolicyService is
 
         // optional activation of policy
         if(activateAt > zeroTimestamp()) {
-            newPolicyState = ACTIVE();
-            applicationInfo.activatedAt = activateAt;
-            applicationInfo.expiredAt = activateAt.addSeconds(applicationInfo.lifetime);
-        }
-
-        // optional collection of premium
-        if(requirePremiumPayment) {
-            Amount premiumPaidAmount = _calculateAndCollectPremium(
-                instance,
-                applicationNftId,
-                applicationInfo);
-
-            applicationInfo.premiumPaidAmount = premiumPaidAmount;
+            applicationInfo = _activate(
+                applicationNftId, 
+                applicationInfo, 
+                activateAt);
         }
 
-        // store updated policy info
+        // update policy and set state to collateralized
         instance.getInstanceStore().updatePolicy(
             applicationNftId, 
             applicationInfo, 
-            newPolicyState);
+            COLLATERALIZED());
+
+        // calculate and store premium
+        IPolicy.PremiumInfo memory premium = _pricingService.calculatePremium(
+            productNftId,
+            applicationInfo.riskId,
+            applicationInfo.sumInsuredAmount,
+            applicationInfo.lifetime,
+            applicationInfo.applicationData,
+            applicationInfo.bundleNftId,
+            applicationInfo.referralId);
+
+        instance.getInstanceStore().createPremium(
+            applicationNftId,
+            premium);
+
+        // update referral counter 
+        {
+            IComponents.ProductInfo memory productInfo = instanceReader.getProductInfo(productNftId);
+
+            if (! productInfo.distributionNftId.eqz()) { // only call distribution service if a distribution component is connected to the product    
+                _distributionService.processReferral(
+                    productInfo.distributionNftId, 
+                    applicationInfo.referralId);
+            }
+        }
+
+        // log policy creation before interactions with token and policy holder
+        emit LogPolicyServicePolicyCreated(applicationNftId, premium.premiumAmount, activateAt);
 
         // TODO add calling pool contract if it needs to validate application
 
-        // TODO: add logging
+        // callback to policy holder if applicable
+        _policyHolderPolicyActivated(applicationNftId, activateAt);
     }
 
 
+    /// @inheritdoc IPolicyService
     function collectPremium(
         NftId policyNftId, 
         Timestamp activateAt
     )
         external 
         virtual
+        nonReentrant()
     {
         // check caller is registered product
         (,, IInstance instance) = _getAndVerifyActiveComponent(PRODUCT());
@@ -200,70 +211,75 @@ contract PolicyService is
         StateId stateId = instanceReader.getPolicyState(policyNftId);
 
         // check policy is in state collateralized or active
-        if (!(stateId == COLLATERALIZED() || stateId == ACTIVE())) {
-            revert ErrorPolicyServicePolicyStateNotCollateralizedOrApplied(policyNftId);
+        if (!(stateId == COLLATERALIZED())) {
+            revert ErrorPolicyServicePolicyStateNotCollateralized(policyNftId);
         }
 
-        IPolicy.PolicyInfo memory policyInfo = instanceReader.getPolicyInfo(policyNftId);
-
         // check if premium is already collected
-        if (policyInfo.premiumPaidAmount.gtz()) {
-            revert ErrorPolicyServicePremiumAlreadyPaid(policyNftId, policyInfo.premiumPaidAmount);
+        if (instanceReader.getPremiumInfoState(policyNftId) == PAID()) {
+            revert ErrorPolicyServicePremiumAlreadyPaid(policyNftId);
         }
 
-        policyInfo.premiumPaidAmount = _calculateAndCollectPremium(
-                instance,
-                policyNftId,
-                policyInfo);
+        IPolicy.PolicyInfo memory policyInfo = instanceReader.getPolicyInfo(policyNftId);
+        IPolicy.PremiumInfo memory premium = instanceReader.getPremiumInfo(policyNftId); 
+        
+        _processPremium(
+            instance,
+            policyNftId,
+            policyInfo,
+            premium);
+
+        // optionally activate policy
+        if(activateAt.gtz()) {
+            policyInfo = _activate(policyNftId, policyInfo, activateAt);
+        }
 
         instance.getInstanceStore().updatePolicy(policyNftId, policyInfo, KEEP_STATE());
+        instance.getInstanceStore().updatePremiumState(policyNftId, PAID());
 
-        if(activateAt.gtz() && policyInfo.activatedAt.eqz()) {
-            activate(policyNftId, activateAt);
-        }
+        // log premium collection before interactions with token
+        emit LogPolicyServicePolicyPremiumCollected(policyNftId, premium.premiumAmount);
 
-        // TODO: add logging
+        _transferFunds(instanceReader, policyNftId, policyInfo.productNftId, premium);
     }
 
-    function activate(NftId policyNftId, Timestamp activateAt) public override {
+    /// @inheritdoc IPolicyService
+    function activate(NftId policyNftId, Timestamp activateAt)
+        external
+        virtual
+        nonReentrant()
+    {
         // check caller is registered product
         (,, IInstance instance) = _getAndVerifyActiveComponent(PRODUCT());
         InstanceReader instanceReader = instance.getInstanceReader();
 
         IPolicy.PolicyInfo memory policyInfo = instanceReader.getPolicyInfo(policyNftId);
+        policyInfo = _activate(policyNftId, policyInfo, activateAt);
 
-        require(
-            policyInfo.activatedAt.eqz(),
-            "ERROR:PRS-020:ALREADY_ACTIVATED");
-
-        policyInfo.activatedAt = activateAt;
-        policyInfo.expiredAt = activateAt.addSeconds(policyInfo.lifetime);
+        instance.getInstanceStore().updatePolicy(policyNftId, policyInfo, KEEP_STATE());
 
-        instance.getInstanceStore().updatePolicy(policyNftId, policyInfo, ACTIVE());
+        // log policy activation before interactions with policy holder
+        emit LogPolicyServicePolicyActivated(policyNftId, activateAt);
 
-        // TODO: add logging
+        // callback to policy holder if applicable
+        _policyHolderPolicyActivated(policyNftId, activateAt);
     }
 
+
     /// @inheritdoc IPolicyService
     function expire(
         NftId policyNftId,
         Timestamp expireAt
     )
         external
-        override
         virtual
-        returns (Timestamp)
+        nonReentrant()
+        returns (Timestamp expiredAt)
     {
         (NftId productNftId,, IInstance instance) = _getAndVerifyActiveComponent(PRODUCT());
-        InstanceReader instanceReader = instance.getInstanceReader();
-
-        // check policy is in state applied
-        if (instanceReader.getPolicyState(policyNftId) != ACTIVE()) {
-            revert ErrorIPolicyServicePolicyNotActive(policyNftId, instanceReader.getPolicyState(policyNftId));
-        }
-
+        
         // check policy matches with calling product
-        IPolicy.PolicyInfo memory policyInfo = instanceReader.getPolicyInfo(policyNftId);
+        IPolicy.PolicyInfo memory policyInfo = instance.getInstanceReader().getPolicyInfo(policyNftId);
         if(policyInfo.productNftId != productNftId) {
             revert ErrorPolicyServicePolicyProductMismatch(
                 policyNftId, 
@@ -271,195 +287,200 @@ contract PolicyService is
                 productNftId);
         }
 
-        if (expireAt.eqz()) {
-            expireAt = TimestampLib.blockTimestamp();
+        return _expire(
+            instance,
+            policyNftId,
+            expireAt
+        );
+    }
+
+    /// @inheritdoc IPolicyService
+    function expirePolicy(
+        IInstance instance,
+        NftId policyNftId,
+        Timestamp expireAt
+    )
+        external
+        virtual
+        nonReentrant()
+        returns (Timestamp expiredAt)
+    {
+        return _expire(
+            instance,
+            policyNftId,
+            expireAt
+        );
+    }
+
+    function _expire(
+        IInstance instance,
+        NftId policyNftId,
+        Timestamp expireAt
+    )
+        internal
+        returns (Timestamp expiredAt)
+    {
+        InstanceReader instanceReader = instance.getInstanceReader();
+        
+        // check policy is active
+        StateId policyState = instanceReader.getPolicyState(policyNftId);
+        IPolicy.PolicyInfo memory policyInfo = instance.getInstanceReader().getPolicyInfo(policyNftId);
+        if (!_policyHasBeenActivated(policyState, policyInfo)) {
+            revert ErrorPolicyServicePolicyNotActive(policyNftId, policyState);
         }
 
-        // check preconditions
-        if (expireAt >= policyInfo.expiredAt) {
-            revert ErrorIPolicyServicePolicyExpirationTooLate(policyNftId, policyInfo.expiredAt, expireAt);
+        // set return value to provided timestamp
+        expiredAt = expireAt;
+
+        // update expiredAt to current block timestamp if not set
+        if (expiredAt.eqz()) {
+            expiredAt = TimestampLib.blockTimestamp();
         }
-        if (expireAt < TimestampLib.blockTimestamp()) {
-            revert ErrorIPolicyServicePolicyExpirationTooEarly(policyNftId, TimestampLib.blockTimestamp(), expireAt);
+
+        // check expiredAt represents a valid expiry time
+        if (expiredAt >= policyInfo.expiredAt) {
+            revert ErrorPolicyServicePolicyExpirationTooLate(policyNftId, policyInfo.expiredAt, expireAt);
         }
-        if (policyInfo.openClaimsCount > 0) {
-            revert ErrorIPolicyServiceOpenClaims(policyNftId, policyInfo.openClaimsCount);
+        if (expiredAt < TimestampLib.blockTimestamp()) {
+            revert ErrorPolicyServicePolicyExpirationTooEarly(policyNftId, TimestampLib.blockTimestamp(), expireAt);
         }
 
-        policyInfo.expiredAt = expireAt;
+        // update policyInfo with new expiredAt timestamp
+        Timestamp originalExpiredAt = policyInfo.expiredAt;
+        policyInfo.expiredAt = expiredAt;
         instance.getInstanceStore().updatePolicy(policyNftId, policyInfo, KEEP_STATE());
 
-        emit LogPolicyServicePolicyExpirationUpdated(policyNftId, expireAt);
+        emit LogPolicyServicePolicyExpirationUpdated(policyNftId, originalExpiredAt, expiredAt);
 
-        return expireAt;
+        // callback to policy holder if applicable
+        _policyHolderPolicyExpired(policyNftId, expiredAt);
     }
 
+
     function close(
         NftId policyNftId
     )
         external 
-        override
+        virtual
+        nonReentrant()
     {
         (,, IInstance instance) = _getAndVerifyActiveComponent(PRODUCT());
         InstanceReader instanceReader = instance.getInstanceReader();
 
+        // check that policy has been activated
         IPolicy.PolicyInfo memory policyInfo = instanceReader.getPolicyInfo(policyNftId);
-
-        if (policyInfo.activatedAt.eqz()) {
-            revert ErrorIPolicyServicePolicyNotActivated(policyNftId);
-        }
-
-        StateId state = instanceReader.getPolicyState(policyNftId);
-        if (state != ACTIVE()) {
-            revert ErrorIPolicyServicePolicyNotActive(policyNftId, state);
+        StateId policyState = instanceReader.getPolicyState(policyNftId);
+        if (!_policyHasBeenActivated(policyState, policyInfo)) {
+            revert ErrorPolicyServicePolicyNotActive(policyNftId, policyState);
         }
 
+        // check that policy has not already been closed
         if (policyInfo.closedAt.gtz()) {
-            revert ErrorIPolicyServicePolicyAlreadyClosed(policyNftId);
-        }
-
-        // TODO consider to allow for underpaid premiums (with the effects of reducing max payouts accordingly)
-        if (!(policyInfo.premiumAmount == policyInfo.premiumPaidAmount)) {
-            revert ErrorPolicyServicePremiumNotFullyPaid(policyNftId, policyInfo.premiumAmount, policyInfo.premiumPaidAmount);
+            revert ErrorPolicyServicePolicyAlreadyClosed(policyNftId);
         }
 
+        // check that policy does not have any open claims
         if (policyInfo.openClaimsCount > 0) {
-            revert ErrorIPolicyServiceOpenClaims(policyNftId, policyInfo.openClaimsCount);
+            revert ErrorPolicyServiceOpenClaims(policyNftId, policyInfo.openClaimsCount);
         }
 
-        policyInfo.closedAt = TimestampLib.blockTimestamp();
+        // TODO consider to allow for underpaid premiums (with the effects of reducing max payouts accordingly)
+        // TODO consider to remove requirement for fully paid premiums altogether
+        if (! instanceReader.getPremiumInfoState(policyNftId).eq(PAID())) {
+            revert ErrorPolicyServicePremiumNotPaid(policyNftId, policyInfo.premiumAmount);
+        }
 
+        // release (remaining) collateral that was blocked by policy
         _poolService.releaseCollateral(
             instance, 
             address(instanceReader.getComponentInfo(policyInfo.productNftId).token),
             policyNftId, 
             policyInfo);
 
+        // TODO consider to also set expiredAt to current block timestamp if that timestamp is still in the futue
+
+        // update policy state to closed
+        policyInfo.closedAt = TimestampLib.blockTimestamp();
         instance.getInstanceStore().updatePolicy(policyNftId, policyInfo, CLOSED());
+
+        emit LogPolicyServicePolicyClosed(policyNftId);
     }
 
 
-    function _calculateAndCollectPremium(
+    /// @dev calculates the premium and updates all counters in the other services
+    function _processPremium(
         IInstance instance,
         NftId applicationNftId,
-        IPolicy.PolicyInfo memory applicationInfo
+        IPolicy.PolicyInfo memory applicationInfo,
+        IPolicy.PremiumInfo memory premium
     )
         internal
         virtual
-        returns (
-            Amount premiumPaidAmount
-        )
     {
         NftId productNftId = applicationInfo.productNftId;
-
-        // calculate premium details
-        IPolicy.Premium memory premium = _pricingService.calculatePremium(
-            productNftId,
-            applicationInfo.riskId,
-            applicationInfo.sumInsuredAmount,
-            applicationInfo.lifetime,
-            applicationInfo.applicationData,
-            applicationInfo.bundleNftId,
-            applicationInfo.referralId);
-
-
-        // update financials and transfer premium tokens
-        premiumPaidAmount = _processAndCollect(
-            instance, 
-            productNftId,
-            applicationNftId, 
-            applicationInfo.premiumAmount,
-            applicationInfo.bundleNftId,
-            applicationInfo.referralId,
-            premium);
-    }
-
-
-    function _processAndCollect(
-        IInstance instance,
-        NftId productNftId,
-        NftId policyNftId,
-        Amount premiumExpectedAmount,
-        NftId bundleNftId,
-        ReferralId referralId,
-        IPolicy.Premium memory premium
-    )
-        internal
-        virtual
-        returns (Amount premiumPaidAmount)
-    {
         InstanceReader instanceReader = instance.getInstanceReader();
-        TokenHandler tokenHandler = instanceReader.getComponentInfo(productNftId).tokenHandler;
-        address policyHolder = getRegistry().ownerOf(policyNftId);
-        premiumPaidAmount = AmountLib.toAmount(premium.premiumAmount);
 
-        _checkPremiumBalanceAndAllowance(
-            tokenHandler, 
-            policyHolder, 
-            premiumExpectedAmount,
-            premiumPaidAmount);
+        // check if premium balance and allowance of policy holder is sufficient
+        {
+            TokenHandler tokenHandler = _getTokenHandler(instanceReader, productNftId);
+            address policyHolder = getRegistry().ownerOf(applicationNftId);
+        
+            _checkPremiumBalanceAndAllowance(
+                tokenHandler.getToken(), 
+                address(tokenHandler),
+                policyHolder, 
+                premium.premiumAmount);
+        }
 
-        _processSaleAndTransferFunds(
+        // update the counters
+        _processSale(
             instanceReader, 
             instance.getInstanceStore(), 
-            tokenHandler, 
-            policyHolder, 
             productNftId, 
-            bundleNftId, 
-            referralId, 
+            applicationInfo.bundleNftId, 
+            applicationInfo.referralId, 
             premium);
     }
 
-
-    function _checkPremiumBalanceAndAllowance(
-        TokenHandler tokenHandler, 
-        address policyHolder, 
-        Amount premiumExpectedAmount,
-        Amount premiumPaidAmount
+    function _activate(
+        NftId policyNftId, 
+        IPolicy.PolicyInfo memory policyInfo,
+        Timestamp activateAt
     )
         internal
         virtual
-        view
+        view 
+        returns (IPolicy.PolicyInfo memory)
     {
-        // TODO decide how to handle this properly
-        // not clear if this is the best way to handle this
-        if (premiumExpectedAmount < premiumPaidAmount) {
-            revert ErrorPolicyServicePremiumHigherThanExpected(premiumExpectedAmount, premiumPaidAmount);
+        // fail if policy has already been activated and activateAt is different
+        if(! policyInfo.activatedAt.eqz() && activateAt != policyInfo.activatedAt) {
+            revert ErrorPolicyServicePolicyAlreadyActivated(policyNftId);
         }
 
-        uint256 premiumAmount = premiumPaidAmount.toInt();
-        uint256 balance = tokenHandler.getToken().balanceOf(policyHolder);
-        uint256 allowance = tokenHandler.getToken().allowance(policyHolder, address(tokenHandler));
-    
-        if (balance < premiumAmount) {
-            revert ErrorPolicyServiceBalanceInsufficient(policyHolder, premiumAmount, balance);
+        // ignore if policy has already been activated and activateAt is the same
+        if (policyInfo.activatedAt == activateAt) {
+            return policyInfo;
         }
 
-        if (allowance < premiumAmount) {
-            revert ErrorPolicyServiceAllowanceInsufficient(policyHolder, address(tokenHandler), premiumAmount, allowance);
-        }
-    }
+        policyInfo.activatedAt = activateAt;
+        policyInfo.expiredAt = activateAt.addSeconds(policyInfo.lifetime);
 
+        return policyInfo;
+    }
 
-    function _processSaleAndTransferFunds(
+    /// @dev update counters by calling the involved services
+    function _processSale(
         InstanceReader instanceReader,
         InstanceStore instanceStore,
-        TokenHandler tokenHandler,
-        address policyHolder,
         NftId productNftId,
         NftId bundleNftId,
         ReferralId referralId,
-        IPolicy.Premium memory premium
+        IPolicy.PremiumInfo memory premium
     )
         internal
         virtual
     {
-        (
-            NftId distributionNftId,
-            address distributionWallet,
-            address poolWallet,
-            address productWallet
-        ) = _getDistributionNftAndWallets(
+        (NftId distributionNftId, , , ) = _getDistributionNftAndWallets(
             instanceReader, 
             productNftId);
 
@@ -467,28 +488,156 @@ contract PolicyService is
         _componentService.increaseProductFees(
             instanceStore, 
             productNftId, 
-            AmountLib.toAmount(premium.productFeeVarAmount + premium.productFeeFixAmount));
+            premium.productFeeVarAmount + premium.productFeeFixAmount);
 
         // update distribution fees and distributor commission and pool fees 
-        _distributionService.processSale(
-            distributionNftId, 
-            referralId, 
-            premium);
+        if (!distributionNftId.eqz()) { // only call distribution service if a distribution component is connected to the product
+            _distributionService.processSale(
+                distributionNftId, 
+                referralId, 
+                premium);
+        }
 
         // update pool and bundle fees 
         _poolService.processSale(
             bundleNftId, 
             premium);
+    }
+
+
+    /// @dev transfer the premium to the wallets the premium is distributed to
+    function _transferFunds(
+        InstanceReader instanceReader,
+        NftId policyNftId,
+        NftId productNftId,
+        IPolicy.PremiumInfo memory premium
+    )
+        internal
+        virtual
+    {
+        TokenHandler tokenHandler = _getTokenHandler(instanceReader, productNftId);
+        address policyHolder = getRegistry().ownerOf(policyNftId);
+
+        (
+            ,
+            address distributionWallet,
+            address poolWallet,
+            address productWallet
+        ) = _getDistributionNftAndWallets(
+            instanceReader, 
+            productNftId);
+
+        tokenHandler.collectTokensToThreeRecipients(
+            policyHolder,
+            productWallet,
+            premium.productFeeAmount,
+            distributionWallet,
+            premium.distributionFeeAndCommissionAmount,
+            poolWallet,
+            premium.poolPremiumAndFeeAmount);
+    }
+
 
-        // TODO: centralize token handling (issue #471)
-        // transfer premium amounts to target wallets
-        tokenHandler.transfer(policyHolder, productWallet, premium.productFeeAmount);
-        tokenHandler.transfer(policyHolder, distributionWallet, premium.distributionFeeAndCommissionAmount);
-        tokenHandler.transfer(policyHolder, poolWallet, premium.poolPremiumAndFeeAmount);
+    /// @dev checks that policy has been collateralized and has been activated.
+    /// does not check if policy has been expired or closed.
+    function _policyHasBeenActivated(
+        StateId policyState,
+        IPolicy.PolicyInfo memory policyInfo
+    )
+        internal
+        view
+        returns (bool)
+    {
+        if (policyState != COLLATERALIZED()) { return false; } 
+        if (TimestampLib.blockTimestamp() < policyInfo.activatedAt) { return false; } 
+        return true;
+    }
+
+
+    /// @dev checks the balance and allowance of the policy holder
+    function _checkPremiumBalanceAndAllowance(
+        IERC20Metadata token,
+        address tokenHandlerAddress, 
+        address policyHolder, 
+        Amount premiumAmount
+    )
+        internal
+        virtual
+        view
+    {
+        uint256 premium = premiumAmount.toInt();
+        uint256 balance = token.balanceOf(policyHolder);
+        uint256 allowance = token.allowance(policyHolder, tokenHandlerAddress);
+    
+        if (balance < premium) {
+            revert ErrorPolicyServiceBalanceInsufficient(policyHolder, premium, balance);
+        }
+
+        if (allowance < premium) {
+            revert ErrorPolicyServiceAllowanceInsufficient(policyHolder, tokenHandlerAddress, premium, allowance);
+        }
     }
 
 
-    function _getTokenHandlerAndProductWallet(
+    function _policyHolderPolicyActivated(
+        NftId policyNftId,
+        Timestamp activateAt
+    )
+        internal
+        virtual
+    {
+        // immediately return if policy is not activated
+        if (activateAt.eqz()) {
+            return;
+        }
+
+        // get policy holder address
+        IPolicyHolder policyHolder = _getPolicyHolder(policyNftId);
+
+        // execute callback if policy holder implements IPolicyHolder
+        if (address(policyHolder) != address(0)) {
+            policyHolder.policyActivated(policyNftId, activateAt);
+        }
+    }
+
+
+    function _policyHolderPolicyExpired(
+        NftId policyNftId,
+        Timestamp expiredAt
+    )
+        internal
+        virtual
+    {
+        // immediately return if policy is not activated
+        if (expiredAt.eqz()) {
+            return;
+        }
+
+        // get policy holder address
+        IPolicyHolder policyHolder = _getPolicyHolder(policyNftId);
+
+        // execute callback if policy holder implements IPolicyHolder
+        if (address(policyHolder) != address(0)) {
+            policyHolder.policyExpired(policyNftId, expiredAt);
+        }
+    }
+
+
+    function _getPolicyHolder(NftId policyNftId)
+        internal 
+        view 
+        returns (IPolicyHolder policyHolder)
+    {
+        address policyHolderAddress = getRegistry().ownerOf(policyNftId);
+        policyHolder = IPolicyHolder(policyHolderAddress);
+
+        if (!ContractLib.isPolicyHolder(policyHolderAddress)) {
+            policyHolder = IPolicyHolder(address(0));
+        }
+    }
+
+
+    function _getTokenHandler(
         InstanceReader instanceReader,
         NftId productNftId
     )
@@ -502,6 +651,7 @@ contract PolicyService is
         tokenHandler = instanceReader.getComponentInfo(productNftId).tokenHandler;
     }
 
+
     function _getDistributionNftAndWallets(
         InstanceReader instanceReader,
         NftId productNftId
@@ -523,6 +673,13 @@ contract PolicyService is
     }
 
 
+    function _getAndVerifyInstanceAndProduct() internal view returns (Product product) {
+        IRegistry.ObjectInfo memory productInfo;
+        (, productInfo,) = _getAndVerifyActiveComponent(PRODUCT());
+        product = Product(productInfo.objectAddress);
+    }
+
+
     function _getDomain() internal pure override returns(ObjectType) {
         return POLICY();
     }