What is 'discount base year' in SAP FS-PM - Policy Management?

discount base year - Overview

• Component: FS-PM

• Component Name: Policy Management

• Description: Completely insured calendar year, free from claims. It is managed to determine the number of claim-free years for the year of reference year of reference 2004, discount base year = 1984, corresponding to 20 claim-free years.

discount base year - Details

• 
  Key Concepts: 
  Discount Base Year (DBY) is a feature in the SAP FS-PM Policy Management component that allows users to set a base year for calculating discounts. This base year is used to calculate the discount rate for each policy year, based on the difference between the current policy year and the base year. The discount rate is then applied to the policy premium to determine the discounted premium amount. 
  
  How to use it: 
  To use the Discount Base Year feature, users must first set up a base year in the system. This can be done by navigating to the “Discount Base Year” tab in the FS-PM Policy Management component and entering the desired base year. Once this is done, users can then enter the policy year and premium amount for each policy and the system will automatically calculate the discounted premium amount based on the difference between the current policy year and the base year. 
  
  Tips & Tricks: 
  When setting up a Discount Base Year, it is important to consider how far back in time you want to set it. Setting it too far back may result in inaccurate discounts, while setting it too close may not provide enough of a discount. It is best to find a balance between these two extremes. 
  
  Related Information: 
  For more information on setting up and using Discount