@etherisc/gif-next 0.0.2-d16f92c-416 → 0.0.2-d1ee1ae-450

package/contracts/product/PolicyService.sol

@@ -1,61 +1,47 @@
 // SPDX-License-Identifier: Apache-2.0
 pragma solidity ^0.8.20;
 
-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 {IERC20Metadata} from "@openzeppelin/contracts/token/ERC20/extensions/IERC20Metadata.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, COMPONENT, 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 {ReferralId} from "../type/Referral.sol";
-import {StateId} from "../type/StateId.sol";
-import {VersionPart} from "../type/Version.sol";
-
-import {ComponentVerifyingService} from "../shared/ComponentVerifyingService.sol";
-import {IApplicationService} from "./IApplicationService.sol";
-import {IBundleService} from "../pool/IBundleService.sol";
-import {IClaimService} from "./IClaimService.sol";
+import {IAccountingService} from "../accounting/IAccountingService.sol";
 import {IComponentService} from "../shared/IComponentService.sol";
+import {IComponents} from "../instance/module/IComponents.sol";
 import {IDistributionService} from "../distribution/IDistributionService.sol";
 import {InstanceReader} from "../instance/InstanceReader.sol";
 import {InstanceStore} from "../instance/InstanceStore.sol";
+import {IInstance} from "../instance/IInstance.sol";
+import {IPolicy} from "../instance/module/IPolicy.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 {IRegistry} from "../registry/IRegistry.sol";
+
+import {Amount} from "../type/Amount.sol";
+import {APPLIED, COLLATERALIZED, KEEP_STATE, CLOSED, DECLINED, PAID} from "../type/StateId.sol";
+import {ContractLib} from "../shared/ContractLib.sol";
+import {NftId} from "../type/NftId.sol";
+import {ObjectType, ACCOUNTING, COMPONENT, DISTRIBUTION, PRODUCT, POOL, POLICY, PRICE} from "../type/ObjectType.sol";
+import {PolicyServiceLib} from "./PolicyServiceLib.sol";
+import {ReferralId} from "../type/Referral.sol";
+import {RiskId} from "../type/RiskId.sol";
 import {Service} from "../shared/Service.sol";
+import {StateId} from "../type/StateId.sol";
+import {Timestamp, TimestampLib} from "../type/Timestamp.sol";
+import {TokenHandler} from "../shared/TokenHandler.sol";
+import {VersionPart} from "../type/Version.sol";
+
 
 contract PolicyService is
-    ComponentVerifyingService, 
+    Service, 
     IPolicyService
 {
-    using NftIdLib for NftId;
-    using TimestampLib for Timestamp;
-
-    IApplicationService internal _applicationService;
+    IAccountingService private _accountingService;
     IComponentService internal _componentService;
-    IBundleService internal _bundleService;
-    IClaimService internal _claimService;
     IDistributionService internal _distributionService;
     IPoolService internal _poolService;
     IPricingService internal _pricingService;
 
-    event LogProductServiceSender(address sender);
-
     function _initialize(
         address owner, 
         bytes memory data
@@ -65,344 +51,454 @@ contract PolicyService is
         initializer
     {
         (
-            address registryAddress,, 
-            //address managerAddress
-            address authority
-        ) = abi.decode(data, (address, address, address));
+            address authority,
+            address registry
+        ) = abi.decode(data, (address, address));
 
-        initializeService(registryAddress, authority, owner);
+        __Service_init(authority, registry, owner);
 
         VersionPart majorVersion = getVersion().toMajorPart();
-        _applicationService = IApplicationService(getRegistry().getServiceAddress(APPLICATION(), majorVersion));
-        _bundleService = IBundleService(getRegistry().getServiceAddress(BUNDLE(), majorVersion));
+        _accountingService = IAccountingService(getRegistry().getServiceAddress(ACCOUNTING(), majorVersion));
         _componentService = IComponentService(getRegistry().getServiceAddress(COMPONENT(), majorVersion));
-        _claimService = IClaimService(getRegistry().getServiceAddress(CLAIM(), majorVersion));
         _poolService = IPoolService(getRegistry().getServiceAddress(POOL(), majorVersion));
         _distributionService = IDistributionService(getRegistry().getServiceAddress(DISTRIBUTION(), majorVersion));
         _pricingService = IPricingService(getRegistry().getServiceAddress(PRICE(), majorVersion));
 
-        registerInterface(type(IPolicyService).interfaceId);
-    }
-
-
-    function _getAndVerifyInstanceAndProduct() internal view returns (Product product) {
-        IRegistry.ObjectInfo memory productInfo;
-        (, productInfo,) = _getAndVerifyActiveComponent(PRODUCT());
-        product = Product(productInfo.objectAddress);
+        _registerInterface(type(IPolicyService).interfaceId);
     }
 
 
     function decline(
-        NftId policyNftId
+        NftId applicationNftId // = policyNftId
     )
         external
-        override
+        virtual
+        restricted()
+        nonReentrant()
     {
-        revert();
+        // checks
+        (IInstance instance,,) = _getAndVerifyCallerForPolicy(applicationNftId);
+
+        // check policy is in state applied
+        if (instance.getInstanceReader().getPolicyState(applicationNftId) != APPLIED()) {
+            revert ErrorPolicyServicePolicyStateNotApplied(applicationNftId);
+        }
+
+        // effects
+        // store updated policy info
+        instance.getInstanceStore().updatePolicyState(
+            applicationNftId, 
+            DECLINED());
+
+        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
+        restricted()
+        nonReentrant()
+        returns (Amount premiumAmount)
     {
-        // check caller is registered product
-        (NftId productNftId,, IInstance instance) = _getAndVerifyActiveComponent(PRODUCT());
-        InstanceReader instanceReader = instance.getInstanceReader();
+        // checks
+        (
+            IInstance instance,
+            NftId productNftId,
+            IPolicy.PolicyInfo memory applicationInfo
+        ) = _getAndVerifyCallerForPolicy(applicationNftId);
 
         // check policy is in state applied
+        InstanceReader instanceReader = instance.getInstanceReader();
         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);
-        }
-        
-        StateId newPolicyState = COLLATERALIZED();
-
+        // effects
         // actual collateralizaion
-        (
-            Amount localCollateralAmount,
-            Amount totalCollateralAmount
-        ) = _poolService.lockCollateral(
+        _poolService.lockCollateral(
             instance,
-            address(instanceReader.getComponentInfo(productNftId).token),
+            address(instanceReader.getToken(productNftId)),
             productNftId,
             applicationNftId,
             applicationInfo.bundleNftId,
             applicationInfo.sumInsuredAmount);
 
         // optional activation of policy
-        if(activateAt > zeroTimestamp()) {
-            newPolicyState = ACTIVE();
-            applicationInfo.activatedAt = activateAt;
-            applicationInfo.expiredAt = activateAt.addSeconds(applicationInfo.lifetime);
+        if(activateAt.gtz()) {
+            applicationInfo = PolicyServiceLib.activate(applicationNftId, applicationInfo, activateAt);
         }
 
-        // optional collection of premium
-        if(requirePremiumPayment) {
-            Amount premiumPaidAmount = _calculateAndCollectPremium(
-                instance,
-                applicationNftId,
-                applicationInfo);
-
-            applicationInfo.premiumPaidAmount = premiumPaidAmount;
-        }
-
-        // store updated policy info
+        // update policy and set state to collateralized
         instance.getInstanceStore().updatePolicy(
             applicationNftId, 
             applicationInfo, 
-            newPolicyState);
+            COLLATERALIZED());
+
+        // calculate and store premium
+        RiskId riskId = applicationInfo.riskId;
+        NftId bundleNftId = applicationInfo.bundleNftId;
+
+        IPolicy.PremiumInfo memory premium = _pricingService.calculatePremium(
+            productNftId,
+            riskId,
+            applicationInfo.sumInsuredAmount,
+            applicationInfo.lifetime,
+            applicationInfo.applicationData,
+            bundleNftId,
+            applicationInfo.referralId);
+
+        premiumAmount = premium.fullPremiumAmount;
+        instance.getInstanceStore().createPremium(
+            applicationNftId,
+            premium);
 
-        // TODO add calling pool contract if it needs to validate application
+        // update referral counter if product has linked distributino component
+        {
+            IComponents.ProductInfo memory productInfo = instanceReader.getProductInfo(productNftId);
+            if (productInfo.hasDistribution) {    
+                _distributionService.processReferral(
+                    productInfo.distributionNftId, 
+                    applicationInfo.referralId);
+            }
+        }
+
+        // link policy to risk and bundle
+        NftId poolNftId = getRegistry().getParentNftId(bundleNftId);
+        instance.getRiskSet().linkPolicy(productNftId, riskId, applicationNftId);
+        instance.getBundleSet().linkPolicy(poolNftId, bundleNftId, applicationNftId);
 
-        // TODO: add logging
+        // log policy creation before interactions with token and policy holder
+        emit LogPolicyServicePolicyCreated(applicationNftId, premium.premiumAmount, activateAt);
+
+        // interactions
+        // callback to policy holder if applicable
+        _policyHolderPolicyActivated(applicationNftId, activateAt);
     }
 
 
+    /// @inheritdoc IPolicyService
     function collectPremium(
         NftId policyNftId, 
         Timestamp activateAt
     )
         external 
         virtual
+        restricted()
+        nonReentrant()
     {
-        // check caller is registered product
-        (,, IInstance instance) = _getAndVerifyActiveComponent(PRODUCT());
+        // checks
+        (
+            IInstance instance,
+            NftId productNftId,
+            IPolicy.PolicyInfo memory policyInfo
+        ) = _getAndVerifyCallerForPolicy(policyNftId);
+
+        // check policy is in state collateralized
         InstanceReader instanceReader = instance.getInstanceReader();
-        StateId stateId = instanceReader.getPolicyState(policyNftId);
+        if (instanceReader.getPolicyState(policyNftId) != COLLATERALIZED()) {
+            revert ErrorPolicyServicePolicyStateNotCollateralized(policyNftId);
+        }
 
-        // check policy is in state collateralized or active
-        if (!(stateId == COLLATERALIZED() || stateId == ACTIVE())) {
-            revert ErrorPolicyServicePolicyStateNotCollateralizedOrApplied(policyNftId);
+        // check if premium has already been collected
+        if (instanceReader.getPremiumInfoState(policyNftId) == PAID()) {
+            revert ErrorPolicyServicePremiumAlreadyPaid(policyNftId);
         }
 
-        IPolicy.PolicyInfo memory policyInfo = instanceReader.getPolicyInfo(policyNftId);
+        // check funds and allowance of policy holder
+        IPolicy.PremiumInfo memory premium = instanceReader.getPremiumInfo(policyNftId);
+        instanceReader.getTokenHandler(
+            productNftId).checkBalanceAndAllowance(
+                getRegistry().ownerOf(policyNftId), 
+                premium.premiumAmount, 
+                false);
+
+        // )
+        // _checkPremiumBalanceAndAllowance(
+        //     tokenHandler.TOKEN(), 
+        //     address(tokenHandler),
+        //     getRegistry().ownerOf(policyNftId), 
+        //     premium.premiumAmount);
+
+        // effects
+        _processSale(
+            instanceReader, 
+            instance.getInstanceStore(), 
+            productNftId, 
+            policyInfo.bundleNftId, 
+            policyInfo.referralId, 
+            premium);
 
-        // check if premium is already collected
-        if (policyInfo.premiumPaidAmount.gtz()) {
-            revert ErrorPolicyServicePremiumAlreadyPaid(policyNftId, policyInfo.premiumPaidAmount);
+        // optionally activate policy
+        if(activateAt.gtz()) {
+            policyInfo = PolicyServiceLib.activate(policyNftId, policyInfo, activateAt);
         }
 
-        policyInfo.premiumPaidAmount = _calculateAndCollectPremium(
-                instance,
-                policyNftId,
-                policyInfo);
+        instance.getInstanceStore().updatePolicy(policyNftId, policyInfo, KEEP_STATE());
+        instance.getInstanceStore().updatePremiumState(policyNftId, PAID());
+
+        // log premium collection before interactions with token
+        emit LogPolicyServicePolicyPremiumCollected(policyNftId, premium.premiumAmount);
+
+        // interactions
+        _transferPremiumAmounts(instanceReader, policyNftId, policyInfo.productNftId, premium);
+    }
+
 
+    /// @inheritdoc IPolicyService
+    function activate(NftId policyNftId, Timestamp activateAt)
+        external
+        virtual
+        restricted()
+        nonReentrant()
+    {
+        // checks
+        (
+            IInstance instance,,
+            IPolicy.PolicyInfo memory policyInfo
+        ) = _getAndVerifyCallerForPolicy(policyNftId);
+
+        // effects
+        policyInfo = PolicyServiceLib.activate(policyNftId, policyInfo, activateAt);
         instance.getInstanceStore().updatePolicy(policyNftId, policyInfo, KEEP_STATE());
 
-        if(activateAt.gtz() && policyInfo.activatedAt.eqz()) {
-            activate(policyNftId, activateAt);
-        }
+        // log policy activation before interactions with policy holder
+        emit LogPolicyServicePolicyActivated(policyNftId, activateAt);
 
-        // TODO: add logging
+        // interactions
+        // callback to policy holder if applicable
+        _policyHolderPolicyActivated(policyNftId, activateAt);
     }
 
-    function activate(NftId policyNftId, Timestamp activateAt) public override {
-        // check caller is registered product
-        (,, IInstance instance) = _getAndVerifyActiveComponent(PRODUCT());
-        InstanceReader instanceReader = instance.getInstanceReader();
+    /// @inheritdoc IPolicyService
+    function adjustActivation(
+        NftId policyNftId,
+        Timestamp newActivateAt
+    )
+        external
+        virtual
+        restricted()
+        nonReentrant()
+    {
+        // checks
+        (
+            IInstance instance,,
+            IPolicy.PolicyInfo memory policyInfo
+        ) = _getAndVerifyCallerForPolicy(policyNftId);
+
+        if (policyInfo.activatedAt.eqz()) {
+            revert ErrorPolicyServicePolicyNotActivated(policyNftId);
+        }
 
-        IPolicy.PolicyInfo memory policyInfo = instanceReader.getPolicyInfo(policyNftId);
+        if (newActivateAt < TimestampLib.blockTimestamp()) {
+            revert ErrorPolicyServicePolicyActivationTooEarly(policyNftId, TimestampLib.blockTimestamp(), newActivateAt);
+        }
 
-        require(
-            policyInfo.activatedAt.eqz(),
-            "ERROR:PRS-020:ALREADY_ACTIVATED");
+        if (newActivateAt > policyInfo.expiredAt) {
+            revert ErrorPolicyServicePolicyActivationTooLate(policyNftId, policyInfo.expiredAt, newActivateAt);
+        }
 
-        policyInfo.activatedAt = activateAt;
-        policyInfo.expiredAt = activateAt.addSeconds(policyInfo.lifetime);
+        // effects
+        policyInfo.activatedAt = newActivateAt;
+        instance.getInstanceStore().updatePolicy(policyNftId, policyInfo, KEEP_STATE());
 
-        instance.getInstanceStore().updatePolicy(policyNftId, policyInfo, ACTIVE());
+        // log policy activation before interactions with policy holder
+        emit LogPolicyServicePolicyActivatedUpdated(policyNftId, newActivateAt);
 
-        // TODO: add logging
+        // interactions
+        // callback to policy holder if applicable
+        _policyHolderPolicyActivated(policyNftId, newActivateAt);
     }
 
 
+    /// @inheritdoc IPolicyService
     function expire(
-        NftId policyNftId
+        NftId policyNftId,
+        Timestamp expireAt
     )
         external
-        override
-        // solhint-disable-next-line no-empty-blocks
+        virtual
+        restricted()
+        nonReentrant()
+        returns (Timestamp expiredAt)
     {
-        
+        // checks
+        (
+            IInstance instance,,
+            IPolicy.PolicyInfo memory policyInfo
+        ) = _getAndVerifyCallerForPolicy(policyNftId);
+
+        // more checks, effects + interactions
+        return _expire(
+            instance,
+            policyNftId,
+            policyInfo,
+            expireAt
+        );
     }
 
+
+    /// @inheritdoc IPolicyService
+    function expirePolicy(
+        IInstance instance,
+        NftId policyNftId,
+        Timestamp expireAt
+    )
+        external
+        virtual
+        restricted()
+        nonReentrant()
+        returns (Timestamp expiredAt)
+    {
+        // checks
+        _checkNftType(policyNftId, POLICY());
+        IPolicy.PolicyInfo memory policyInfo = instance.getInstanceReader().getPolicyInfo(
+            policyNftId);
+
+        // more checks, effects + interactions
+        return _expire(
+            instance,
+            policyNftId,
+            policyInfo,
+            expireAt
+        );
+    }
+
+
+    /// @inheritdoc IPolicyService
     function close(
         NftId policyNftId
     )
         external 
-        override
+        virtual
+        restricted()
+        nonReentrant()
     {
-        (,, IInstance instance) = _getAndVerifyActiveComponent(PRODUCT());
+        // checks
+        (
+            IInstance instance,
+            NftId productNftId,
+            IPolicy.PolicyInfo memory policyInfo
+        ) = _getAndVerifyCallerForPolicy(policyNftId);
         InstanceReader instanceReader = instance.getInstanceReader();
 
-        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);
+        // check policy is in a closeable state
+        if (!PolicyServiceLib.policyIsCloseable(instanceReader, policyNftId)) {
+            revert ErrorPolicyServicePolicyNotCloseable(policyNftId);
         }
 
-        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);
-        }
+        // check that policy has been activated
+        RiskId riskId = policyInfo.riskId;
+        NftId bundleNftId = policyInfo.bundleNftId;
 
-        if (policyInfo.openClaimsCount > 0) {
-            revert ErrorIPolicyServiceOpenClaims(policyNftId, policyInfo.openClaimsCount);
+        if (instanceReader.getPremiumInfoState(policyNftId) != PAID()) {
+            revert ErrorPolicyServicePremiumNotPaid(policyNftId, policyInfo.premiumAmount);
         }
 
-        policyInfo.closedAt = TimestampLib.blockTimestamp();
-
+        // effects
+        // 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());
+
+        // unlink policy from risk and bundle
+        NftId poolNftId = getRegistry().getParentNftId(bundleNftId);
+        instance.getRiskSet().unlinkPolicy(productNftId, riskId, policyNftId);
+        instance.getBundleSet().unlinkPolicy(poolNftId, bundleNftId, policyNftId);
+
+        emit LogPolicyServicePolicyClosed(policyNftId);
     }
 
 
-    function _calculateAndCollectPremium(
+    /// @dev shared functionality for expire() and policyExpire().
+    function _expire(
         IInstance instance,
-        NftId applicationNftId,
-        IPolicy.PolicyInfo memory applicationInfo
+        NftId policyNftId,
+        IPolicy.PolicyInfo memory policyInfo,
+        Timestamp expireAt
     )
         internal
-        virtual
-        returns (
-            Amount premiumPaidAmount
-        )
+        returns (Timestamp)
     {
-        NftId productNftId = applicationInfo.productNftId;
+        policyInfo = PolicyServiceLib.expire(
+            instance.getInstanceReader(),
+            policyNftId,
+            policyInfo,
+            expireAt);
 
-        // calculate premium details
-        IPolicy.Premium memory premium = _pricingService.calculatePremium(
-            productNftId,
-            applicationInfo.riskId,
-            applicationInfo.sumInsuredAmount,
-            applicationInfo.lifetime,
-            applicationInfo.applicationData,
-            applicationInfo.bundleNftId,
-            applicationInfo.referralId);
+        instance.getInstanceStore().updatePolicy(policyNftId, policyInfo, KEEP_STATE());
 
+        emit LogPolicyServicePolicyExpirationUpdated(policyNftId, policyInfo.expiredAt);
 
-        // update financials and transfer premium tokens
-        premiumPaidAmount = _processAndCollect(
-            instance, 
-            productNftId,
-            applicationNftId, 
-            applicationInfo.premiumAmount,
-            applicationInfo.bundleNftId,
-            applicationInfo.referralId,
-            premium);
+        // interactions
+        // callback to policy holder if applicable
+        _policyHolderPolicyExpired(policyNftId, policyInfo.expiredAt);
+        return policyInfo.expiredAt;
     }
 
 
-    function _processAndCollect(
-        IInstance instance,
+    /// @dev update counters by calling the involved services
+    function _processSale(
+        InstanceReader instanceReader,
+        InstanceStore instanceStore,
         NftId productNftId,
-        NftId policyNftId,
-        Amount premiumExpectedAmount,
         NftId bundleNftId,
         ReferralId referralId,
-        IPolicy.Premium memory premium
+        IPolicy.PremiumInfo 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);
-
-        _processSaleAndTransferFunds(
+        (NftId distributionNftId,,,) = _getDistributionNftAndWallets(
             instanceReader, 
-            instance.getInstanceStore(), 
-            tokenHandler, 
-            policyHolder, 
-            productNftId, 
-            bundleNftId, 
-            referralId, 
-            premium);
-    }
-
+            productNftId);
 
-    function _checkPremiumBalanceAndAllowance(
-        TokenHandler tokenHandler, 
-        address policyHolder, 
-        Amount premiumExpectedAmount,
-        Amount premiumPaidAmount
-    )
-        internal
-        virtual
-        view
-    {
-        // 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);
-        }
+        // update product fees, distribution and pool fees 
+        _accountingService.increaseProductFees(
+            instanceStore, 
+            productNftId, 
+            premium.productFeeVarAmount + premium.productFeeFixAmount);
 
-        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);
+        // 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);
         }
 
-        if (allowance < premiumAmount) {
-            revert ErrorPolicyServiceAllowanceInsufficient(policyHolder, address(tokenHandler), premiumAmount, allowance);
-        }
+        // update pool and bundle fees 
+        _poolService.processSale(
+            bundleNftId, 
+            premium);
     }
 
 
-    function _processSaleAndTransferFunds(
+    /// @dev transfer the premium to the wallets the premium is distributed to
+    function _transferPremiumAmounts(
         InstanceReader instanceReader,
-        InstanceStore instanceStore,
-        TokenHandler tokenHandler,
-        address policyHolder,
+        NftId policyNftId,
         NftId productNftId,
-        NftId bundleNftId,
-        ReferralId referralId,
-        IPolicy.Premium memory premium
+        IPolicy.PremiumInfo memory premium
     )
         internal
         virtual
     {
+        address policyHolder = getRegistry().ownerOf(policyNftId);
+
         (
-            NftId distributionNftId,
+            ,
             address distributionWallet,
             address poolWallet,
             address productWallet
@@ -410,44 +506,78 @@ contract PolicyService is
             instanceReader, 
             productNftId);
 
-        // update product fees, distribution and pool fees 
-        _componentService.increaseProductFees(
-            instanceStore, 
-            productNftId, 
-            AmountLib.toAmount(premium.productFeeVarAmount + premium.productFeeFixAmount));
+        // step 1: collect premium amount from policy holder
+        TokenHandler tokenHandler = instanceReader.getTokenHandler(productNftId);
+        tokenHandler.pullToken(policyHolder, premium.premiumAmount);
 
-        // update distribution fees and distributor commission and pool fees 
-        _distributionService.processSale(
-            distributionNftId, 
-            referralId, 
-            premium);
+        // step 2: push distribution fee to distribution wallet
+        if (premium.distributionFeeAndCommissionAmount.gtz()) {
+            tokenHandler.pushToken(distributionWallet, premium.distributionFeeAndCommissionAmount);
+        }
 
-        // update pool and bundle fees 
-        _poolService.processSale(
-            bundleNftId, 
-            premium);
+        // step 3: push pool fee, bundle fee and pool premium to pool wallet
+        if (premium.poolPremiumAndFeeAmount.gtz()) {
+            tokenHandler.pushToken(poolWallet, premium.poolPremiumAndFeeAmount);
+        }
+    }
+    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);
 
-        // transfer premium amounts to target wallets
-        tokenHandler.transfer(policyHolder, productWallet, premium.productFeeAmount);
-        tokenHandler.transfer(policyHolder, distributionWallet, premium.distributionFeeAndCommissionAmount);
-        tokenHandler.transfer(policyHolder, poolWallet, premium.poolPremiumAndFeeAmount);
+        // execute callback if policy holder implements IPolicyHolder
+        if (address(policyHolder) != address(0)) {
+            policyHolder.policyActivated(policyNftId, activateAt);
+        }
     }
 
 
-    function _getTokenHandlerAndProductWallet(
-        InstanceReader instanceReader,
-        NftId productNftId
+    function _policyHolderPolicyExpired(
+        NftId policyNftId,
+        Timestamp expiredAt
     )
-        internal 
+        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 (
-            TokenHandler tokenHandler
-        )
+        returns (IPolicyHolder policyHolder)
     {
-        tokenHandler = instanceReader.getComponentInfo(productNftId).tokenHandler;
+        address policyHolderAddress = getRegistry().ownerOf(policyNftId);
+        policyHolder = IPolicyHolder(policyHolderAddress);
+
+        if (!ContractLib.isPolicyHolder(policyHolderAddress)) {
+            policyHolder = IPolicyHolder(address(0));
+        }
     }
 
+
     function _getDistributionNftAndWallets(
         InstanceReader instanceReader,
         NftId productNftId
@@ -462,10 +592,45 @@ contract PolicyService is
         )
     {
         IComponents.ProductInfo memory productInfo = instanceReader.getProductInfo(productNftId);
-        distributionNftId = productInfo.distributionNftId;
-        distributionWallet = instanceReader.getComponentInfo(distributionNftId).wallet;
-        poolWallet = instanceReader.getComponentInfo(productInfo.poolNftId).wallet;
-        productWallet = instanceReader.getComponentInfo(productNftId).wallet;
+        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();
+        }
+    }
+
+
+    function  _getAndVerifyCallerForPolicy(NftId policyNftId)
+        internal
+        virtual
+        view
+        returns (
+            IInstance instance,
+            NftId productNftId,
+            IPolicy.PolicyInfo memory policyInfo
+        )
+    {
+        (
+            IRegistry.ObjectInfo memory productInfo, 
+            address instanceAddress
+        ) = ContractLib.getAndVerifyComponent(
+            getRegistry(), 
+            msg.sender, // caller contract 
+            PRODUCT(), // caller must be product
+            true); // only active caller
+
+        productNftId = productInfo.nftId; // calling product nft id
+        instance = IInstance(instanceAddress);
+        policyInfo = instance.getInstanceReader().getPolicyInfo(policyNftId);
+
+        if (policyInfo.productNftId != productNftId) {
+            revert ErrorPolicyServicePolicyProductMismatch(
+                policyNftId, 
+                productNftId,
+                policyInfo.productNftId);
+        }
     }