Education and demonstration – Business or economics
Reexamination Certificate
1997-11-14
2001-02-13
Smith, Jeffrey A. (Department: 3732)
Education and demonstration
Business or economics
C705S004000, C705S500000
Reexamination Certificate
active
06186793
ABSTRACT:
This invention is a process of establishing insurance rates. More particularly, it is a process of determining expected losses to be covered by insurance for specific geographic locations, and using that information to establish insurance rates for those specific geographic locations.
BACKGROUND OF THE INVENTION
Insurance companies must evaluate expected losses in determining the rates to be charged for insurance coverage to protect against those losses. Currently, expected losses for many types of insurance, such as casualty and property insurance, are determined by reference to a selected geographic territory. More specifically, a geographic territory is first defined or selected, and expected losses per insured risk are then calculated for that territory. The basic rate charged for insurance coverage, before individual risk factors other than location are considered, is the same for all specific locations within that geographic territory.
The current method does not reflect the fact that expected losses may vary significantly for different locations within a geographic territory. In addition, the rates charged for insurance coverage may vary dramatically from one geographic territory to the next. As a result, two neighbors who happen to live on opposite sides of a territorial boundary may be asked to pay very different insurance rates.
It is, therefore, an object of the invention to provide a more accurate method of evaluating expected losses at given geographic locations for the purpose of establishing insurance rates for those locations.
It is a further object of the invention to eliminate dramatic differences between the insurance rates charged at adjacent or nearby locations.
SUMMARY OF THE INVENTION
These objects and others are achieved according to the present invention by an insurance rating process comprising the steps of selecting a plurality of predetermined geographic locations or points, determining the expected losses at the predetermined points, calculating an insurance rate for each of the predetermined points, and then interpolating among the insurance rate values established for the predetermined points to determine a rate at the desired location.
Further objects, features, and advantages of the invention will become evident from a consideration of the following detailed description when taken in conjunction with the accompanying drawings and the appended claims.
BRIEF DESCRIPTION OF THE DRAWINGS
For the purpose of facilitating an understanding of the invention there is illustrated in the accompanying drawings a preferred embodiment thereof, from an inspection of which, when considered in connection with the following description, its construction and operation, and many of its advantages should be readily understood and appreciated.
FIG. 1
is a diagram illustrating the method of the present invention;
FIG. 2
is a diagram showing exemplary data for use in the method of the present invention;
FIG. 3
is a diagram illustrating an insurance rating system known in the prior art;
FIG. 4
is a diagram illustrating the method of the present invention;
FIG. 5
is a diagram illustrating the method of the present invention;
FIG. 6
a
and
FIG. 6
b
are the first and second pages, respectively, of a table illustrating the method of the present invention; and
FIG. 7
is a diagram illustrating the method of the present invention.
REFERENCES:
patent: 5897619 (1999-04-01), Hargrove, Jr. et al.
Jones, David C., “GUS-Underwriting Workstation of the Future (Geographic Underwriting System”, National Underwriter Property & Casualty-Risk & Benefits Management, n51, p22, Dec. 17, 1990.
Covaleski, John M., “Software Helps Carriers Avoid Perilous Areas”, Best's Review/ Property-Casualty Insurance Edition, vol. 94, Issue 10, pp 82-83, Feb. 1994.
Musulin, Rade T., “Issues in the Regulatory Acceptance of Computer Modeling for Property Insurance”,Journal of Insurance Regulation,vol. 15, No. 3, pp. 342-359, Spring 1997.
“Risk Classification,” Robert Finger, Foundations of Casualty Actuarial Science, pp. 231-276—1990.
Pamphlet re Vertical Mapper Software, Northwood Geoscience Ltd, publication date unknown.
“Generalized Additive Models,” T.J. Hastie and R. J. Tibshirani, published in 1990 and reprinted 1991.
“A Geographic Information Analysis of Urban Infant Mortality Rates,” Gerard Rushton, Diane Krishnamurtl, Rajesh Krishnamurthy and Hu Song, Jul. 1995.
“Using a Geographic Information System to Identify Territory Boundaries,” Steven Christopherson and Debra L. Werland, published after Dec. 15, 1995.
M. Boskov and R.J. Verrall,Premium Rating by Geographic Area Using Spatial Models, ASTIN BULLETIN, 1994.
G.C. Taylor,Use of Spline Functions for Premium Rating by Geographic Area, ASTIN BULLETIN, 1989.
Brubaker Randall E.
Smith Jeffrey A.
Trexler Bushnell Giangiorgi & Blackstone Ltd.
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