@etherisc/gif-next 0.0.2-9dd41ff-671 → 0.0.2-9e03baf-990

package/contracts/product/PolicyService.sol

@@ -1,58 +1,48 @@
 // SPDX-License-Identifier: Apache-2.0
-pragma solidity ^0.8.19;
+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";
-import {IDistributionComponent} from "../distribution/IDistributionComponent.sol";
 import {IInstance} from "../instance/IInstance.sol";
 import {IPolicy} from "../instance/module/IPolicy.sol";
-import {IPoolComponent} from "../pool/IPoolComponent.sol";
-import {IRisk} from "../instance/module/IRisk.sol";
-import {IBundle} from "../instance/module/IBundle.sol";
-import {ISetup} from "../instance/module/ISetup.sol";
 
 import {TokenHandler} from "../shared/TokenHandler.sol";
 
 import {Amount, AmountLib} from "../type/Amount.sol";
-import {ClaimId, ClaimIdLib} from "../type/ClaimId.sol";
 import {Timestamp, TimestampLib, zeroTimestamp} from "../type/Timestamp.sol";
-import {UFixed, UFixedLib} from "../type/UFixed.sol";
-import {ObjectType, APPLICATION, DISTRIBUTION, PRODUCT, POOL, POLICY, BUNDLE, CLAIM, PRICE} from "../type/ObjectType.sol";
-import {APPLIED, COLLATERALIZED, ACTIVE, KEEP_STATE, CLOSED, DECLINED, CONFIRMED} from "../type/StateId.sol";
-import {NftId, NftIdLib} from "../type/NftId.sol";
-import {PayoutId, PayoutIdLib} from "../type/PayoutId.sol";
+import {ObjectType, APPLICATION, COMPONENT, DISTRIBUTION, PRODUCT, POOL, POLICY, BUNDLE, CLAIM, PRICE} from "../type/ObjectType.sol";
+import {APPLIED, COLLATERALIZED, KEEP_STATE, CLOSED, DECLINED, PAID} from "../type/StateId.sol";
+import {NftId} from "../type/NftId.sol";
+import {ReferralId} from "../type/Referral.sol";
 import {StateId} from "../type/StateId.sol";
 import {VersionPart} from "../type/Version.sol";
 
-import {ComponentService} from "../shared/ComponentService.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";
+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";
-import {IService} from "../shared/IService.sol";
-import {Service} from "../shared/Service.sol";
 
 contract PolicyService is
-    ComponentService, 
+    ComponentVerifyingService, 
     IPolicyService
 {
-    using NftIdLib for NftId;
-    using TimestampLib for Timestamp;
-
-    IApplicationService internal _applicationService;
-    IBundleService internal _bundleService;
-    IClaimService internal _claimService;
+    IComponentService internal _componentService;
     IDistributionService internal _distributionService;
     IPoolService internal _poolService;
     IPricingService internal _pricingService;
 
-    event LogProductServiceSender(address sender);
-
     function _initialize(
         address owner, 
         bytes memory data
@@ -62,60 +52,79 @@ 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();
+        _componentService = IComponentService(getRegistry().getServiceAddress(COMPONENT(), majorVersion));
         _poolService = IPoolService(getRegistry().getServiceAddress(POOL(), majorVersion));
-        _bundleService = IBundleService(getRegistry().getServiceAddress(BUNDLE(), majorVersion));
-        _claimService = IClaimService(getRegistry().getServiceAddress(CLAIM(), majorVersion));
-        _applicationService = IApplicationService(getRegistry().getServiceAddress(APPLICATION(), majorVersion));
         _distributionService = IDistributionService(getRegistry().getServiceAddress(DISTRIBUTION(), majorVersion));
         _pricingService = IPricingService(getRegistry().getServiceAddress(PRICE(), majorVersion));
 
-        registerInterface(type(IPolicyService).interfaceId);
-    }
-
-
-    function getDomain() public pure override returns(ObjectType) {
-        return POLICY();
-    }
-
-
-    function _getAndVerifyInstanceAndProduct() internal view returns (Product product) {
-        IRegistry.ObjectInfo memory productInfo;
-        (, productInfo,) = _getAndVerifyCallingComponentAndInstance(PRODUCT());
-        product = Product(productInfo.objectAddress);
+        _registerInterface(type(IPolicyService).interfaceId);
     }
 
 
     function decline(
-        NftId policyNftId
+        NftId applicationNftId // = policyNftId
     )
         external
-        override
+        virtual
+        nonReentrant()
     {
-        revert();
+        _checkNftType(applicationNftId, POLICY());
+
+        (NftId productNftId,, IInstance instance) = _getAndVerifyActiveComponent(PRODUCT());
+        InstanceReader instanceReader = instance.getInstanceReader();
+
+        // check policy is in state applied
+        if (instanceReader.getPolicyState(applicationNftId) != APPLIED()) {
+            revert ErrorPolicyServicePolicyStateNotApplied(applicationNftId);
+        }
+
+        // check policy matches with calling product
+        IPolicy.PolicyInfo memory applicationInfo = instanceReader.getPolicyInfo(applicationNftId);
+        if(applicationInfo.productNftId != productNftId) {
+            revert ErrorPolicyServicePolicyProductMismatch(
+                applicationNftId, 
+                applicationInfo.productNftId, 
+                productNftId);
+        }
+        
+
+        // store updated policy info
+        instance.getInstanceStore().updatePolicyState(
+            applicationNftId, 
+            DECLINED());
+
+        emit LogPolicyServicePolicyDeclined(applicationNftId);
     }
 
 
-    /// @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()
+        returns (Amount premiumAmount)
     {
+        _checkNftType(applicationNftId, POLICY());
+
         // check caller is registered product
-        (NftId productNftId,, IInstance instance) = _getAndVerifyCallingComponentAndInstance(PRODUCT());
+        (NftId productNftId,, IInstance instance) = _getAndVerifyActiveComponent(PRODUCT());
         InstanceReader instanceReader = instance.getInstanceReader();
 
+        // check policy is in state applied
+        if (instanceReader.getPolicyState(applicationNftId) != APPLIED()) {
+            revert ErrorPolicyServicePolicyStateNotApplied(applicationNftId);
+        }
+
         // check policy matches with calling product
         IPolicy.PolicyInfo memory applicationInfo = instanceReader.getPolicyInfo(applicationNftId);
         if(applicationInfo.productNftId != productNftId) {
@@ -124,255 +133,563 @@ contract PolicyService is
                 applicationInfo.productNftId, 
                 productNftId);
         }
-
-        // check policy is in state applied
-        if (instanceReader.getPolicyState(applicationNftId) != APPLIED()) {
-            revert ErrorPolicyServicePolicyStateNotApplied(applicationNftId);
-        }
         
-        StateId newPolicyState = COLLATERALIZED();
+        // actual collateralizaion
+        _poolService.lockCollateral(
+            instance,
+            address(instanceReader.getComponentInfo(productNftId).token),
+            productNftId,
+            applicationNftId,
+            applicationInfo.bundleNftId,
+            applicationInfo.sumInsuredAmount);
 
         // optional activation of policy
         if(activateAt > zeroTimestamp()) {
-            newPolicyState = ACTIVE();
-            applicationInfo.activatedAt = activateAt;
-            applicationInfo.expiredAt = activateAt.addSeconds(applicationInfo.lifetime);
+            applicationInfo = _activate(
+                applicationNftId, 
+                applicationInfo, 
+                activateAt);
         }
 
-        // lock bundle collateral
-        Amount netPremiumAmount = AmountLib.zero(); // > 0 if immediate premium payment 
+        // update policy and set state to collateralized
+        instance.getInstanceStore().updatePolicy(
+            applicationNftId, 
+            applicationInfo, 
+            COLLATERALIZED());
 
-        // optional collection of premium
-        if(requirePremiumPayment) {
-            netPremiumAmount = _processPremiumByTreasury(
-                instance, 
-                applicationNftId, 
-                applicationInfo.premiumAmount);
+        // calculate and store premium
+        IPolicy.PremiumInfo memory premium = _pricingService.calculatePremium(
+            productNftId,
+            applicationInfo.riskId,
+            applicationInfo.sumInsuredAmount,
+            applicationInfo.lifetime,
+            applicationInfo.applicationData,
+            applicationInfo.bundleNftId,
+            applicationInfo.referralId);
 
-            applicationInfo.premiumPaidAmount = applicationInfo.premiumPaidAmount + applicationInfo.premiumAmount;
-        }
+        instance.getInstanceStore().createPremium(
+            applicationNftId,
+            premium);
 
-        // store updated policy info
-        instance.getInstanceStore().updatePolicy(applicationNftId, applicationInfo, newPolicyState);
+        premiumAmount = premium.fullPremiumAmount;
 
-        // lock collateral and update pool and bundle book keeping
-        // pool retention level: fraction of sum insured that product will cover from pool funds directly
-        // eg retention level 30%, payouts up to 30% of the sum insured will be made from the product's pool directly
-        // for the remaining 70% the pool owns a policy that will cover claims that exceed the 30% of the sum insured
-        // might also call pool component (for isVerifyingApplications pools)
-        _poolService.lockCollateral(
-            instance,
-            productNftId,
-            applicationNftId, 
-            applicationInfo,
-            netPremiumAmount); // for pool book keeping (fee + additional capital)
+        // update referral counter 
+        {
+            IComponents.ProductInfo memory productInfo = instanceReader.getProductInfo(productNftId);
 
-        // TODO: add logging
-    }
+            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);
+
+        // callback to policy holder if applicable
+        _policyHolderPolicyActivated(applicationNftId, activateAt);
+    }
 
-    function calculateRequiredCollateral(
-        UFixed collateralizationLevel, 
-        Amount sumInsuredAmount
-    )
-        public 
-        pure 
-        virtual 
-        returns(Amount collateralAmount)
-    {
-        UFixed collateralUFixed =  collateralizationLevel * sumInsuredAmount.toUFixed();
-        return AmountLib.toAmount(collateralUFixed.toInt());
-    } 
 
+    /// @inheritdoc IPolicyService
     function collectPremium(
         NftId policyNftId, 
         Timestamp activateAt
     )
         external 
         virtual
+        nonReentrant()
     {
+        _checkNftType(policyNftId, POLICY());
+
         // check caller is registered product
-        (NftId productNftId,, IInstance instance) = _getAndVerifyCallingComponentAndInstance(PRODUCT());
+        (,, IInstance instance) = _getAndVerifyActiveComponent(PRODUCT());
         InstanceReader instanceReader = instance.getInstanceReader();
-        IPolicy.PolicyInfo memory policyInfo = instanceReader.getPolicyInfo(policyNftId);
+        StateId stateId = instanceReader.getPolicyState(policyNftId);
 
-        if (policyInfo.premiumPaidAmount == policyInfo.premiumAmount) {
-            revert ErrorPolicyServicePremiumAlreadyPaid(policyNftId, policyInfo.premiumPaidAmount);
+        // check policy is in state collateralized or active
+        if (!(stateId == COLLATERALIZED())) {
+            revert ErrorPolicyServicePolicyStateNotCollateralized(policyNftId);
         }
 
-        Amount unpaidPremiumAmount = policyInfo.premiumAmount - policyInfo.premiumPaidAmount;
+        // check if premium is already collected
+        if (instanceReader.getPremiumInfoState(policyNftId) == PAID()) {
+            revert ErrorPolicyServicePremiumAlreadyPaid(policyNftId);
+        }
 
-        Amount netPremiumAmount = _processPremiumByTreasury(
-                instance, 
-                policyNftId, 
-                unpaidPremiumAmount);
+        IPolicy.PolicyInfo memory policyInfo = instanceReader.getPolicyInfo(policyNftId);
+        IPolicy.PremiumInfo memory premium = instanceReader.getPremiumInfo(policyNftId); 
+        
+        _processPremium(
+            instance,
+            policyNftId,
+            policyInfo,
+            premium);
 
-        policyInfo.premiumPaidAmount = policyInfo.premiumPaidAmount + unpaidPremiumAmount;
+        // optionally activate policy
+        if(activateAt.gtz()) {
+            policyInfo = _activate(policyNftId, policyInfo, activateAt);
+        }
 
-        _bundleService.increaseBalance(instance, policyInfo.bundleNftId, netPremiumAmount);
         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()
+    {
+        _checkNftType(policyNftId, POLICY());
+
         // check caller is registered product
-        (,, IInstance instance) = _getAndVerifyCallingComponentAndInstance(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
+        NftId policyNftId,
+        Timestamp expireAt
     )
         external
-        override
-        // solhint-disable-next-line no-empty-blocks
+        virtual
+        nonReentrant()
+        returns (Timestamp expiredAt)
     {
+        _checkNftType(policyNftId, POLICY());
+
+        (NftId productNftId,, IInstance instance) = _getAndVerifyActiveComponent(PRODUCT());
         
+        // check policy matches with calling product
+        IPolicy.PolicyInfo memory policyInfo = instance.getInstanceReader().getPolicyInfo(policyNftId);
+        if(policyInfo.productNftId != productNftId) {
+            revert ErrorPolicyServicePolicyProductMismatch(
+                policyNftId, 
+                policyInfo.productNftId, 
+                productNftId);
+        }
+
+        return _expire(
+            instance,
+            policyNftId,
+            expireAt
+        );
     }
 
-    function close(
-        NftId policyNftId
+    /// @inheritdoc IPolicyService
+    function expirePolicy(
+        IInstance instance,
+        NftId policyNftId,
+        Timestamp expireAt
     )
-        external 
-        override
+        external
+        virtual
+        nonReentrant()
+        returns (Timestamp expiredAt)
+    {
+        _checkNftType(policyNftId, POLICY());
+
+        return _expire(
+            instance,
+            policyNftId,
+            expireAt
+        );
+    }
+
+    function _expire(
+        IInstance instance,
+        NftId policyNftId,
+        Timestamp expireAt
+    )
+        internal
+        returns (Timestamp expiredAt)
     {
-        (,, IInstance instance) = _getAndVerifyCallingComponentAndInstance(PRODUCT());
         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);
+        }
 
-        IPolicy.PolicyInfo memory policyInfo = instanceReader.getPolicyInfo(policyNftId);
+        // set return value to provided timestamp
+        expiredAt = expireAt;
 
-        if (policyInfo.activatedAt.eqz()) {
-            revert ErrorIPolicyServicePolicyNotActivated(policyNftId);
+        // update expiredAt to current block timestamp if not set
+        if (expiredAt.eqz()) {
+            expiredAt = TimestampLib.blockTimestamp();
         }
 
-        StateId state = instanceReader.getPolicyState(policyNftId);
-        if (state != ACTIVE()) {
-            revert ErrorIPolicyServicePolicyNotActive(policyNftId, state);
+        // check expiredAt represents a valid expiry time
+        if (expiredAt >= policyInfo.expiredAt) {
+            revert ErrorPolicyServicePolicyExpirationTooLate(policyNftId, policyInfo.expiredAt, expireAt);
+        }
+        if (expiredAt < TimestampLib.blockTimestamp()) {
+            revert ErrorPolicyServicePolicyExpirationTooEarly(policyNftId, TimestampLib.blockTimestamp(), expireAt);
         }
 
-        if (policyInfo.closedAt.gtz()) {
-            revert ErrorIPolicyServicePolicyAlreadyClosed(policyNftId);
+        // update policyInfo with new expiredAt timestamp
+        Timestamp originalExpiredAt = policyInfo.expiredAt;
+        policyInfo.expiredAt = expiredAt;
+        instance.getInstanceStore().updatePolicy(policyNftId, policyInfo, KEEP_STATE());
+
+        emit LogPolicyServicePolicyExpirationUpdated(policyNftId, originalExpiredAt, expiredAt);
+
+        // callback to policy holder if applicable
+        _policyHolderPolicyExpired(policyNftId, expiredAt);
+    }
+
+
+    function close(
+        NftId policyNftId
+    )
+        external 
+        virtual
+        nonReentrant()
+    {
+        _checkNftType(policyNftId, POLICY());
+        
+        (,, IInstance instance) = _getAndVerifyActiveComponent(PRODUCT());
+        InstanceReader instanceReader = instance.getInstanceReader();
+
+        // check that policy has been activated
+        IPolicy.PolicyInfo memory policyInfo = instanceReader.getPolicyInfo(policyNftId);
+        StateId policyState = instanceReader.getPolicyState(policyNftId);
+        if (!_policyHasBeenActivated(policyState, policyInfo)) {
+            revert ErrorPolicyServicePolicyNotActive(policyNftId, policyState);
         }
 
-        // 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);
+        // check that policy has not already been closed
+        if (policyInfo.closedAt.gtz()) {
+            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 _processPremiumByTreasury(
+    /// @dev calculates the premium and updates all counters in the other services
+    function _processPremium(
         IInstance instance,
+        NftId applicationNftId,
+        IPolicy.PolicyInfo memory applicationInfo,
+        IPolicy.PremiumInfo memory premium
+    )
+        internal
+        virtual
+    {
+        NftId productNftId = applicationInfo.productNftId;
+        InstanceReader instanceReader = instance.getInstanceReader();
+
+        // check if premium balance and allowance of policy holder is sufficient
+        {
+            TokenHandler tokenHandler = _getTokenHandler(instanceReader, productNftId);
+            address policyHolder = getRegistry().ownerOf(applicationNftId);
+        
+            _checkPremiumBalanceAndAllowance(
+                tokenHandler.TOKEN(), 
+                address(tokenHandler),
+                policyHolder, 
+                premium.premiumAmount);
+        }
+
+        // update the counters
+        _processSale(
+            instanceReader, 
+            instance.getInstanceStore(), 
+            productNftId, 
+            applicationInfo.bundleNftId, 
+            applicationInfo.referralId, 
+            premium);
+    }
+
+    function _activate(
+        NftId policyNftId, 
+        IPolicy.PolicyInfo memory policyInfo,
+        Timestamp activateAt
+    )
+        internal
+        virtual
+        view 
+        returns (IPolicy.PolicyInfo memory)
+    {
+        // fail if policy has already been activated and activateAt is different
+        if(! policyInfo.activatedAt.eqz() && activateAt != policyInfo.activatedAt) {
+            revert ErrorPolicyServicePolicyAlreadyActivated(policyNftId);
+        }
+
+        // ignore if policy has already been activated and activateAt is the same
+        if (policyInfo.activatedAt == activateAt) {
+            return policyInfo;
+        }
+
+        policyInfo.activatedAt = activateAt;
+        policyInfo.expiredAt = activateAt.addSeconds(policyInfo.lifetime);
+
+        return policyInfo;
+    }
+
+    /// @dev update counters by calling the involved services
+    function _processSale(
+        InstanceReader instanceReader,
+        InstanceStore instanceStore,
+        NftId productNftId,
+        NftId bundleNftId,
+        ReferralId referralId,
+        IPolicy.PremiumInfo memory premium
+    )
+        internal
+        virtual
+    {
+        (NftId distributionNftId, , , ) = _getDistributionNftAndWallets(
+            instanceReader, 
+            productNftId);
+
+        // update product fees, distribution and pool fees 
+        _componentService.increaseProductFees(
+            instanceStore, 
+            productNftId, 
+            premium.productFeeVarAmount + premium.productFeeFixAmount);
+
+        // update distribution fees and distributor commission and pool fees 
+        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,
-        Amount premiumExpectedAmount
+        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);
+    }
+
+
+    /// @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
-        returns (Amount netPremiumAmount)
+        virtual
+        view
     {
-        // process token transfer(s)
-        if(premiumExpectedAmount.eqz()) {
-            return AmountLib.zero();
+        uint256 premium = premiumAmount.toInt();
+        uint256 balance = token.balanceOf(policyHolder);
+        uint256 allowance = token.allowance(policyHolder, tokenHandlerAddress);
+    
+        if (balance < premium) {
+            revert ErrorPolicyServiceBalanceInsufficient(policyHolder, premium, balance);
         }
 
-        NftId productNftId = getRegistry().getObjectInfo(policyNftId).parentNftId;
-        IPolicy.PolicyInfo memory policyInfo = instance.getInstanceReader().getPolicyInfo(policyNftId);
-        IPolicy.Premium memory premium = _pricingService.calculatePremium(
-            productNftId,
-            policyInfo.riskId,
-            policyInfo.sumInsuredAmount,
-            policyInfo.lifetime,
-            policyInfo.applicationData,
-            policyInfo.bundleNftId,
-            policyInfo.referralId
-            );
-
-        if (premium.premiumAmount != premiumExpectedAmount.toInt()) {
-            revert ErrorPolicyServicePremiumMismatch(
-                policyNftId, 
-                premiumExpectedAmount, 
-                AmountLib.toAmount(premium.premiumAmount));
+        if (allowance < premium) {
+            revert ErrorPolicyServiceAllowanceInsufficient(policyHolder, tokenHandlerAddress, premium, allowance);
         }
+    }
+
 
-        address policyOwner = getRegistry().ownerOf(policyNftId);
-        ISetup.ProductSetupInfo memory productSetupInfo = instance.getInstanceReader().getProductSetupInfo(productNftId);
-        TokenHandler tokenHandler = productSetupInfo.tokenHandler;
-        if (tokenHandler.getToken().allowance(policyOwner, address(tokenHandler)) < premium.premiumAmount) {
-            revert ErrorIPolicyServiceInsufficientAllowance(policyOwner, address(tokenHandler), premium.premiumAmount);
+    function _policyHolderPolicyActivated(
+        NftId policyNftId,
+        Timestamp activateAt
+    )
+        internal
+        virtual
+    {
+        // immediately return if policy is not activated
+        if (activateAt.eqz()) {
+            return;
         }
 
-        Amount productFeeAmountToTransfer = AmountLib.toAmount(premium.productFeeFixAmount + premium.productFeeVarAmount);
-        Amount distributionFeeAmountToTransfer = AmountLib.toAmount(premium.distributionFeeFixAmount + premium.distributionFeeVarAmount - premium.discountAmount);
-        uint256 poolFeeAmountToTransfer = premium.poolFeeFixAmount + premium.poolFeeVarAmount;
-        uint256 bundleFeeAmountToTransfer = premium.bundleFeeFixAmount + premium.bundleFeeVarAmount;
-        Amount poolAmountToTransfer = AmountLib.toAmount(premium.netPremiumAmount + poolFeeAmountToTransfer + bundleFeeAmountToTransfer);
+        // get policy holder address
+        IPolicyHolder policyHolder = _getPolicyHolder(policyNftId);
 
-        netPremiumAmount = AmountLib.toAmount(premium.netPremiumAmount);
+        // execute callback if policy holder implements IPolicyHolder
+        if (address(policyHolder) != address(0)) {
+            policyHolder.policyActivated(policyNftId, activateAt);
+        }
+    }
 
-        // move product fee to product wallet
-        {
-            address productWallet = productSetupInfo.wallet;
-            tokenHandler.transfer(policyOwner, productWallet, productFeeAmountToTransfer);
+
+    function _policyHolderPolicyExpired(
+        NftId policyNftId,
+        Timestamp expiredAt
+    )
+        internal
+        virtual
+    {
+        // immediately return if policy is not activated
+        if (expiredAt.eqz()) {
+            return;
         }
 
-        // move distribution fee to distribution wallet
-        {
-            ISetup.DistributionSetupInfo memory distributionSetupInfo = instance.getInstanceReader().getDistributionSetupInfo(productSetupInfo.distributionNftId);
-            address distributionWallet = distributionSetupInfo.wallet;
-            tokenHandler.transfer(policyOwner, distributionWallet, distributionFeeAmountToTransfer);
-            _distributionService.processSale(productSetupInfo.distributionNftId, policyInfo.referralId, premium, distributionFeeAmountToTransfer);
+        // get policy holder address
+        IPolicyHolder policyHolder = _getPolicyHolder(policyNftId);
+
+        // execute callback if policy holder implements IPolicyHolder
+        if (address(policyHolder) != address(0)) {
+            policyHolder.policyExpired(policyNftId, expiredAt);
         }
-        
-        // move netpremium, bundleFee and poolFee to pool wallet
-        {
-            address poolWallet = instance.getInstanceReader().getComponentInfo(productSetupInfo.poolNftId).wallet;
-            tokenHandler.transfer(policyOwner, poolWallet, poolAmountToTransfer);
-            _poolService.processSale(policyInfo.bundleNftId, premium, poolAmountToTransfer);
+    }
+
+
+    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));
         }
+    }
 
-        // validate total amount transferred
-        {
-            Amount totalTransferred = distributionFeeAmountToTransfer + poolAmountToTransfer + productFeeAmountToTransfer;
 
-            if (premium.premiumAmount != totalTransferred.toInt()) {
-                revert ErrorPolicyServiceTransferredPremiumMismatch(
-                    policyNftId, 
-                    AmountLib.toAmount(premium.premiumAmount), 
-                    totalTransferred);
-            }
+    function _getTokenHandler(
+        InstanceReader instanceReader,
+        NftId productNftId
+    )
+        internal 
+        virtual
+        view 
+        returns (
+            TokenHandler tokenHandler
+        )
+    {
+        tokenHandler = instanceReader.getComponentInfo(productNftId).tokenHandler;
+    }
+
+
+    function _getDistributionNftAndWallets(
+        InstanceReader instanceReader,
+        NftId productNftId
+    )
+        internal 
+        virtual
+        view returns (
+            NftId distributionNftId,
+            address distributionWallet,
+            address poolWallet,
+            address productWallet
+        )
+    {
+        IComponents.ProductInfo memory productInfo = instanceReader.getProductInfo(productNftId);
+        productWallet = instanceReader.getComponentInfo(productNftId).tokenHandler.getWallet();
+        poolWallet = instanceReader.getComponentInfo(productInfo.poolNftId).tokenHandler.getWallet();
+
+        if (productInfo.hasDistribution) {
+            distributionNftId = productInfo.distributionNftId;
+            distributionWallet = instanceReader.getComponentInfo(distributionNftId).tokenHandler.getWallet();
         }
+    }
+
 
-        // TODO: add logging
+    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();
     }
 }