@etherisc/gif-next 0.0.2-d67ce7f-686 → 0.0.2-d6a50e7-658

package/contracts/product/PolicyService.sol

@@ -3,52 +3,44 @@ 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 {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 {IRegistry} from "../registry/IRegistry.sol";
 
-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, KEEP_STATE, CLOSED, DECLINED} from "../type/StateId.sol";
-import {NftId, NftIdLib} from "../type/NftId.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 {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";
 
-import {ComponentVerifyingService} from "../shared/ComponentVerifyingService.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 {IPolicyService} from "./IPolicyService.sol";
-import {IPoolService} from "../pool/IPoolService.sol";
-import {IPricingService} from "./IPricingService.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
@@ -58,57 +50,39 @@ 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);
+        _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();
+        // checks
+        (IInstance instance,,) = _getAndVerifyCallerForPolicy(applicationNftId);
 
         // check policy is in state applied
-        if (instanceReader.getPolicyState(applicationNftId) != APPLIED()) {
+        if (instance.getInstanceReader().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);
-        }
-        
-
+        // effects
         // store updated policy info
         instance.getInstanceStore().updatePolicyState(
             applicationNftId, 
@@ -117,42 +91,33 @@ contract PolicyService is
         emit LogPolicyServicePolicyDeclined(applicationNftId);
     }
 
-    event LogDebug(uint idx, string message);
 
     /// @inheritdoc IPolicyService
-    function collateralize(
+    function createPolicy(
         NftId applicationNftId, // = policyNftId
-        bool requirePremiumPayment,
         Timestamp activateAt
     )
         external 
-        virtual override
+        virtual
+        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),
             productNftId,
@@ -161,39 +126,58 @@ contract PolicyService is
             applicationInfo.sumInsuredAmount);
 
         // optional activation of policy
-        if(activateAt > zeroTimestamp()) {
-            applicationInfo.activatedAt = activateAt;
-            applicationInfo.expiredAt = activateAt.addSeconds(applicationInfo.lifetime);
-        }
-
-        IPolicy.Premium memory premium;
-
-        // optional: calculate the premium and update counters for collection at the end of this function
-        if(requirePremiumPayment) {
-            premium = _calculateAndProcessPremium(
-                instance,
-                applicationNftId,
-                applicationInfo);
-
-            applicationInfo.premiumPaidAmount = AmountLib.toAmount(premium.premiumAmount);
+        if(activateAt > TimestampLib.zero()) {
+            applicationInfo = _activate(applicationNftId, applicationInfo, activateAt);
         }
 
-        // store updated policy info
+        // update policy and set state to collateralized
         instance.getInstanceStore().updatePolicy(
             applicationNftId, 
             applicationInfo, 
-            newPolicyState);
+            COLLATERALIZED());
 
-        // TODO add calling pool contract if it needs to validate application
+        // calculate and store premium
+        RiskId riskId = applicationInfo.riskId;
+        NftId bundleNftId = applicationInfo.bundleNftId;
 
-        // TODO: add logging
+        IPolicy.PremiumInfo memory premium = _pricingService.calculatePremium(
+            productNftId,
+            riskId,
+            applicationInfo.sumInsuredAmount,
+            applicationInfo.lifetime,
+            applicationInfo.applicationData,
+            bundleNftId,
+            applicationInfo.referralId);
 
-        // optional: transfer funds for premium 
-        if(requirePremiumPayment) {
-            _transferFunds(instanceReader, applicationNftId, applicationInfo.productNftId, premium);
+        premiumAmount = premium.fullPremiumAmount;
+        instance.getInstanceStore().createPremium(
+            applicationNftId,
+            premium);
+
+        // 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().getObjectInfo(bundleNftId).parentNftId;
+        instance.getRiskSet().linkPolicy(productNftId, riskId, applicationNftId);
+        instance.getBundleSet().linkPolicy(poolNftId, bundleNftId, applicationNftId);
+
+        // 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, 
@@ -201,235 +185,309 @@ contract PolicyService is
     )
         external 
         virtual
+        nonReentrant()
     {
-        // check caller is registered product
-        (,, IInstance instance) = _getAndVerifyActiveComponent(PRODUCT());
-        InstanceReader instanceReader = instance.getInstanceReader();
-        StateId stateId = instanceReader.getPolicyState(policyNftId);
+        // checks
+        (
+            IInstance instance,
+            NftId productNftId,
+            IPolicy.PolicyInfo memory policyInfo
+        ) = _getAndVerifyCallerForPolicy(policyNftId);
 
-        // check policy is in state collateralized or active
-        if (!(stateId == COLLATERALIZED())) {
+        // check policy is in state collateralized
+        InstanceReader instanceReader = instance.getInstanceReader();
+        if (instanceReader.getPolicyState(policyNftId) != 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);
+        // check if premium has already been collected
+        if (instanceReader.getPremiumInfoState(policyNftId) == PAID()) {
+            revert ErrorPolicyServicePremiumAlreadyPaid(policyNftId);
         }
 
-        // calculate premium
-        IPolicy.Premium memory premium = _calculateAndProcessPremium(
-                instance,
-                policyNftId,
-                policyInfo);
+        // check funds and allowance of policy holder
+        IPolicy.PremiumInfo memory premium = instanceReader.getPremiumInfo(policyNftId);
+        TokenHandler tokenHandler = _getTokenHandler(instanceReader, policyInfo.productNftId);        
+        _checkPremiumBalanceAndAllowance(
+            tokenHandler.TOKEN(), 
+            address(tokenHandler),
+            getRegistry().ownerOf(policyNftId), 
+            premium.premiumAmount);
 
-        policyInfo.premiumPaidAmount = AmountLib.toAmount(premium.premiumAmount);
-
-        instance.getInstanceStore().updatePolicy(policyNftId, policyInfo, KEEP_STATE());
+        // effects
+        _processSale(
+            instanceReader, 
+            instance.getInstanceStore(), 
+            productNftId, 
+            policyInfo.bundleNftId, 
+            policyInfo.referralId, 
+            premium);
 
-        if(activateAt.gtz() && policyInfo.activatedAt.eqz()) {
-            activate(policyNftId, activateAt);
+        // optionally activate policy
+        if(activateAt.gtz()) {
+            policyInfo = _activate(policyNftId, policyInfo, activateAt);
         }
 
-        // TODO: add logging
+        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
         _transferFunds(instanceReader, policyNftId, policyInfo.productNftId, premium);
     }
 
-    /// @inheritdoc IPolicyService
-    function activate(NftId policyNftId, Timestamp activateAt) public override {
-        // check caller is registered product
-        (,, IInstance instance) = _getAndVerifyActiveComponent(PRODUCT());
-        InstanceReader instanceReader = instance.getInstanceReader();
-
-        IPolicy.PolicyInfo memory policyInfo = instanceReader.getPolicyInfo(policyNftId);
-
-        if(! policyInfo.activatedAt.eqz()) {
-            revert ErrorPolicyServicePolicyAlreadyActivated(policyNftId);
-        }
 
-        policyInfo.activatedAt = activateAt;
-        policyInfo.expiredAt = activateAt.addSeconds(policyInfo.lifetime);
+    /// @inheritdoc IPolicyService
+    function activate(NftId policyNftId, Timestamp activateAt)
+        external
+        virtual
+        nonReentrant()
+    {
+        // checks
+        (
+            IInstance instance,,
+            IPolicy.PolicyInfo memory policyInfo
+        ) = _getAndVerifyCallerForPolicy(policyNftId);
 
+        // effects
+        policyInfo = _activate(policyNftId, policyInfo, activateAt);
         instance.getInstanceStore().updatePolicy(policyNftId, policyInfo, KEEP_STATE());
 
-        // TODO: add logging
+        // log policy activation before interactions with policy holder
+        emit LogPolicyServicePolicyActivated(policyNftId, activateAt);
+
+        // interactions
+        // 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 matches with calling product
-        IPolicy.PolicyInfo memory policyInfo = instanceReader.getPolicyInfo(policyNftId);
-        if(policyInfo.productNftId != productNftId) {
-            revert ErrorPolicyServicePolicyProductMismatch(
-                policyNftId, 
-                policyInfo.productNftId, 
-                productNftId);
-        }
-
-        // check policy is in state applied or not active
-        if (instanceReader.getPolicyState(policyNftId) != COLLATERALIZED() || TimestampLib.blockTimestamp() < policyInfo.activatedAt) {
-            revert ErrorIPolicyServicePolicyNotActive(policyNftId, instanceReader.getPolicyState(policyNftId));
-        }
-
-
-        if (expireAt.eqz()) {
-            expireAt = TimestampLib.blockTimestamp();
-        }
+        // checks
+        (
+            IInstance instance,,
+            IPolicy.PolicyInfo memory policyInfo
+        ) = _getAndVerifyCallerForPolicy(policyNftId);
 
-        // check preconditions
-        if (expireAt >= policyInfo.expiredAt) {
-            revert ErrorIPolicyServicePolicyExpirationTooLate(policyNftId, policyInfo.expiredAt, expireAt);
-        }
-        if (expireAt < TimestampLib.blockTimestamp()) {
-            revert ErrorIPolicyServicePolicyExpirationTooEarly(policyNftId, TimestampLib.blockTimestamp(), expireAt);
-        }
-        if (policyInfo.openClaimsCount > 0) {
-            revert ErrorIPolicyServiceOpenClaims(policyNftId, policyInfo.openClaimsCount);
-        }
+        // more checks, effects + interactions
+        return _expire(
+            instance,
+            policyNftId,
+            policyInfo,
+            expireAt
+        );
+    }
 
-        policyInfo.expiredAt = expireAt;
-        instance.getInstanceStore().updatePolicy(policyNftId, policyInfo, KEEP_STATE());
 
-        emit LogPolicyServicePolicyExpirationUpdated(policyNftId, expireAt);
+    /// @inheritdoc IPolicyService
+    function expirePolicy(
+        IInstance instance,
+        NftId policyNftId,
+        Timestamp expireAt
+    )
+        external
+        virtual
+        nonReentrant()
+        returns (Timestamp expiredAt)
+    {
+        // checks
+        _checkNftType(policyNftId, POLICY());
+        IPolicy.PolicyInfo memory policyInfo = instance.getInstanceReader().getPolicyInfo(
+            policyNftId);
 
-        return expireAt;
+        // more checks, effects + interactions
+        return _expire(
+            instance,
+            policyNftId,
+            policyInfo,
+            expireAt
+        );
     }
 
+
+    /// @inheritdoc IPolicyService
     function close(
         NftId policyNftId
     )
         external 
-        override
+        virtual
+        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);
+        // check policy is in a closeable state
+        if (!policyIsCloseable(instanceReader, policyNftId)) {
+            revert ErrorPolicyServicePolicyNotCloseable(policyNftId);
         }
 
-        StateId state = instanceReader.getPolicyState(policyNftId);
-        if (state != COLLATERALIZED() || TimestampLib.blockTimestamp() < policyInfo.activatedAt) {
-            revert ErrorIPolicyServicePolicyNotActive(policyNftId, state);
-        }
-
-        if (policyInfo.closedAt.gtz()) {
-            revert ErrorIPolicyServicePolicyAlreadyClosed(policyNftId);
-        }
+        // check that policy has been activated
+        RiskId riskId = policyInfo.riskId;
+        NftId bundleNftId = policyInfo.bundleNftId;
 
-        // 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);
+        if (instanceReader.getPremiumInfoState(policyNftId) != PAID()) {
+            revert ErrorPolicyServicePremiumNotPaid(policyNftId, policyInfo.premiumAmount);
         }
 
-        if (policyInfo.openClaimsCount > 0) {
-            revert ErrorIPolicyServiceOpenClaims(policyNftId, policyInfo.openClaimsCount);
-        }
-
-        policyInfo.closedAt = TimestampLib.blockTimestamp();
-
+        // effects
+        // release (remaining) collateral that was blocked by policy
         _poolService.releaseCollateral(
             instance, 
-            address(instanceReader.getComponentInfo(policyInfo.productNftId).token),
+            address(instanceReader.getComponentInfo(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().getObjectInfo(bundleNftId).parentNftId;
+        instance.getRiskSet().unlinkPolicy(productNftId, riskId, policyNftId);
+        instance.getBundleSet().unlinkPolicy(poolNftId, bundleNftId, policyNftId);
+
+        emit LogPolicyServicePolicyClosed(policyNftId);
     }
 
 
-    /// @dev calculates the premium and updates all counters in the other services
-    function _calculateAndProcessPremium(
+    function policyIsCloseable(InstanceReader instanceReader, NftId policyNftId)
+        public
+        view
+        returns (bool isCloseable)
+    {
+        // policy already closed
+        if (instanceReader.getPolicyState(policyNftId) == CLOSED()) {
+            return false;
+        }
+
+        IPolicy.PolicyInfo memory info = instanceReader.getPolicyInfo(policyNftId);
+        
+        if (info.productNftId.eqz()) { return false; } // not closeable: policy does not exist (or does not belong to this instance)
+        if (info.activatedAt.eqz()) { return false; } // not closeable: not yet activated
+        if (info.openClaimsCount > 0) { return false; } // not closeable: has open claims
+
+        // closeable: if sum of claims matches sum insured a policy may be closed prior to the expiry date
+        if (info.claimAmount == info.sumInsuredAmount) { return true; }
+
+        // not closeable: not yet expired
+        if (TimestampLib.blockTimestamp() < info.expiredAt) { return false; }
+
+        // all conditions to close the policy are met
+        return true; 
+    }
+
+    /// @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 (
-            IPolicy.Premium memory premium
-        )
+        returns (Timestamp expiredAt)
     {
-        NftId productNftId = applicationInfo.productNftId;
-        InstanceReader instanceReader = instance.getInstanceReader();
+        // checks
+        // check policy is active
+        StateId policyState = instance.getInstanceReader().getPolicyState(policyNftId);
+        if (!_policyHasBeenActivated(policyState, policyInfo)) {
+            revert ErrorPolicyServicePolicyNotActive(policyNftId, policyState);
+        }
 
-        // calculate premium details
-        premium = _pricingService.calculatePremium(
-            productNftId,
-            applicationInfo.riskId,
-            applicationInfo.sumInsuredAmount,
-            applicationInfo.lifetime,
-            applicationInfo.applicationData,
-            applicationInfo.bundleNftId,
-            applicationInfo.referralId);
+        // set return value to provided timestamp
+        expiredAt = expireAt;
 
-        // ensure the calculated premium is not higher than the expected premium from the application
-        if (applicationInfo.premiumAmount.toInt() < premium.premiumAmount) {
-            revert ErrorPolicyServicePremiumHigherThanExpected(applicationInfo.premiumAmount.toInt(), premium.premiumAmount);
+        // update expiredAt to current block timestamp if not set
+        if (expiredAt.eqz()) {
+            expiredAt = TimestampLib.blockTimestamp();
         }
 
-        // check if premium balance and allowance of policy holder is sufficient
-        {
-            TokenHandler tokenHandler = instanceReader.getComponentInfo(productNftId).tokenHandler;
-            address policyHolder = getRegistry().ownerOf(applicationNftId);
-        
-            _checkPremiumBalanceAndAllowance(
-                tokenHandler.getToken(), 
-                address(tokenHandler),
-                policyHolder, 
-                applicationInfo.premiumAmount,
-                AmountLib.toAmount(premium.premiumAmount));
+        // check expiredAt represents a valid expiry time
+        if (expiredAt >= policyInfo.expiredAt) {
+            revert ErrorPolicyServicePolicyExpirationTooLate(policyNftId, policyInfo.expiredAt, expireAt);
         }
 
-        // update the counters
-        _processSale(
-            instanceReader, 
-            instance.getInstanceStore(), 
-            productNftId, 
-            applicationInfo.bundleNftId, 
-            applicationInfo.referralId, 
-            premium);
+        if (expiredAt < TimestampLib.blockTimestamp()) {
+            revert ErrorPolicyServicePolicyExpirationTooEarly(policyNftId, TimestampLib.blockTimestamp(), expireAt);
+        }
+
+        // effects
+        // 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);
+
+        // interactions
+        // callback to policy holder if applicable
+        _policyHolderPolicyExpired(policyNftId, expiredAt);
     }
 
-    /// @dev checks the balance and allowance of the policy holder
-    function _checkPremiumBalanceAndAllowance(
-        IERC20Metadata token,
-        address tokenHandlerAddress, 
-        address policyHolder, 
-        Amount premiumExpectedAmount,
-        Amount premiumAmount
+    // TODO cleanup
+    // /// @dev Calculates the premium and updates all counters in the other services.
+    // /// Only book keeping, no token transfers.
+    // function _processPremium(
+    //     IInstance instance,
+    //     NftId applicationNftId,
+    //     IPolicy.PolicyInfo memory applicationInfo,
+    //     IPolicy.PremiumInfo memory premium
+    // )
+    //     internal
+    //     virtual
+    // {
+    //     // 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
+        view 
+        returns (IPolicy.PolicyInfo memory)
     {
-        uint256 premium = premiumAmount.toInt();
-        uint256 balance = token.balanceOf(policyHolder);
-        uint256 allowance = token.allowance(policyHolder, tokenHandlerAddress);
-    
-        if (balance < premium) {
-            revert ErrorPolicyServiceBalanceInsufficient(policyHolder, premium, balance);
+        // fail if policy has already been activated and activateAt is different
+        if(! policyInfo.activatedAt.eqz() && activateAt != policyInfo.activatedAt) {
+            revert ErrorPolicyServicePolicyAlreadyActivated(policyNftId);
         }
 
-        if (allowance < premium) {
-            revert ErrorPolicyServiceAllowanceInsufficient(policyHolder, tokenHandlerAddress, premium, allowance);
+        // 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
@@ -439,31 +497,28 @@ contract PolicyService is
         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);
 
         // update product fees, distribution and pool fees 
-        _componentService.increaseProductFees(
+        _accountingService.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(
@@ -471,21 +526,22 @@ contract PolicyService is
             premium);
     }
 
+
     /// @dev transfer the premium to the wallets the premium is distributed to
     function _transferFunds(
         InstanceReader instanceReader,
         NftId policyNftId,
         NftId productNftId,
-        IPolicy.Premium memory premium
+        IPolicy.PremiumInfo memory premium
     )
         internal
         virtual
     {
-        TokenHandler tokenHandler = instanceReader.getComponentInfo(productNftId).tokenHandler;
+        TokenHandler tokenHandler = _getTokenHandler(instanceReader, productNftId);
         address policyHolder = getRegistry().ownerOf(policyNftId);
 
         (
-            NftId distributionNftId,
+            ,
             address distributionWallet,
             address poolWallet,
             address productWallet
@@ -493,15 +549,117 @@ contract PolicyService is
             instanceReader, 
             productNftId);
 
-        // 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);
+        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
+        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 _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 _getTokenHandlerAndProductWallet(
+    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
     )
@@ -515,6 +673,7 @@ contract PolicyService is
         tokenHandler = instanceReader.getComponentInfo(productNftId).tokenHandler;
     }
 
+
     function _getDistributionNftAndWallets(
         InstanceReader instanceReader,
         NftId productNftId
@@ -529,10 +688,45 @@ 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;
+        instance = IInstance(instanceAddress);
+        policyInfo = instance.getInstanceReader().getPolicyInfo(policyNftId);
+
+        if (policyInfo.productNftId != productNftId) {
+            revert ErrorPolicyServicePolicyProductMismatch(
+                policyNftId, 
+                productNftId,
+                policyInfo.productNftId);
+        }
     }