Data processing: financial – business practice – management – or co – Automated electrical financial or business practice or... – Insurance
Reexamination Certificate
1998-12-18
2001-12-18
Trammell, James P. (Department: 2161)
Data processing: financial, business practice, management, or co
Automated electrical financial or business practice or...
Insurance
C705S400000
Reexamination Certificate
active
06332125
ABSTRACT:
BACKGROUND OF THE INVENTION
This invention relates to providing termination benefits for employees who have been non-voluntarily terminated from employment.
One common way to control such benefits is through a private arrangement between an employer and each displaced employee, for example, a standard severance policy or a special termination package. Typical arrangements provide for a single payment on the date of termination. The amount of the termination payment is often based on the terminated employee's salary level and tenure. Outplacement services are sometimes offered.
Government sponsored unemployment insurance programs also typically pay benefits for a fixed number of weeks and usually are funded by premiums imposed on employers.
Private long-term disability insurance, funded by premiums, pays benefits when an employee is unable to work because of illness or injury.
An employee can also privately obtain coverage that continues payment of credit obligations for a brief period during unemployment.
Non-voluntary job changes are common. The causes include “downsizing”, “rightsizing”, mergers and acquisitions, product line changes, technology advances, degregation expanding global markets, and geographic redistribution of work force.
Although time between jobs tends to be limited for anyone who actively seeks a new job, it can be longer than is provided for in typical severance packages. The “fixed” monthly living costs incurred by moderate and high income employees, such as mortgage, credit card debt, tuition, car and insurance payments, tend to be large. An interruption in an employee's income stream after termination from one job and before the start of another one can cause disruption in life style and jeopardize his credit rating and therefore be a significant concern to him.
Many employers incur large costs for non-voluntary terminations of their employees. The annual costs of non-voluntary terminations may vary and in an occasional year be sharply higher than normal.
SUMMARY OF THE INVENTION
Among other things, the invention overcomes previous concerns about the risks associated with adverse selection by employers in connection with employment termination insurance products and makes such products feasible and profitable.
In general, in one aspect, the invention features a computer-based method for determining a price for an insurance product under which an insurer will provide termination benefits to employees who are non-voluntarily terminated from employment by an employer. Historical information is stored about rates of termination of employees of the employer who are non-voluntarily terminated during a predetermined historical period. Other historical information is stored indicative of periods of time during which employees who are non-voluntarily terminated are expected to remain unemployed. Based on the stored historical information, an amount of money is estimated that will be required to pay termination benefits under the insurance product to employees who are non-voluntarily terminated, assuming a continuation of the historical termination rates. A price is determined for the insurance product that is smaller than the estimated amount of money so that the employer's cost for termination benefits will be smaller under the insurance product than without the insurance product.
In implementations of the invention, the historical information about rates of termination includes numbers of terminated employees per year during the historical period, salary histories of the terminated employees, tenures of the terminated employees, and job classifications of terminated employees. The price for the insurance product is determined by considering different cells of employees separately, each cell including employees whose salary histories and tenures fall within predefined ranges. The price reflects expected periods of unemployment that are shorter than the historical periods of unemployment. The estimated amount of money that would be required to pay termination benefits is adjusted for expected inflation.
The insurance product includes a basic coverage that will provide termination benefits to no more employees than the average annual percentage of employees who were non-voluntarily terminated during the predetermined historical period, and the price determination reflects the basic coverage. The insurance product also includes an enhanced coverage that will provide termination benefits to employees who exceed the average annual percentage of employees who were non-voluntarily terminated during the predetermined historical period, and the price determination reflects the enhanced coverage. The enhanced coverage can be limited by a stop loss amount, and the price determination is based on the stop loss amount. Rights to the enhanced coverage are made available over time only in accordance with a vesting schedule.
In some implementations, the determination of price for the enhanced coverage yields a pricing formula based on numbers of terminations and the pricing formula is applied retroactively based on actual termination experience.
A limit of coverage is determined for each of the cells expressed as a maximum percentage of employees in that cell who will be eligible for basic termination benefits and if the stop loss approach is used for enhanced coverage, the vested percentage amount of the enhanced coverage for each cell, and a separate sub-price is set for each of the cells.
In general, in another aspect, the invention features a computer-based method for managing a durational risk associated with an insurance product. Information is stored about dates of termination and historical employment experiences of employees who have been terminated from employment by the employer and are covered by the insurance product. Information about displacement duration is also stored. Based on the stored information, information is generated that is useful in assisting terminated employees in finding new jobs within periods that will reduce the impact of durational risk. Dates of reemployment of terminated employees are tracked. Payments of termination benefits are controlled based on stored dates of termination.
In implementations of the invention, the payments are also controlled based on individual pay period benefit amounts and cumulative benefit amounts.
In general, in another aspect, the invention features a computer-based method of administering termination benefits. Information is stored that identifies separate time limits of termination benefits to be paid with respect to employees belonging to different risk cells. Information is also stored about claims made for termination benefits with respect to the employees belonging to different risk cells. The limits of termination benefits are compared with claims made for each of the risk cells, and benefits are withheld when the actual time for a risk cell exceeds the limit for the risk cell.
In implementations of the invention, information is stored about the periods of time that an employee must remain unemployed before termination benefits are paid. The time periods are compared with an actual time period during which an employee has remained unemployed. Benefits are withheld until the actual time period exceeds the stored time period.
Information may be received, stored, and searched about employees eligible for state unemployment insurance benefits. The eligible employees can be compared with employees who are terminated from employment by the employer. Benefits may be withheld when a terminated employee's eligibility status for state benefits matches a rule for withholding benefits.
In general, in another aspect, the invention features a computer-based method of administering basic and enhanced coverages of insurance products. The method includes calculating, storing, reporting and distributing broker commissions, claims administration fees, IP override, fronting fees, carrier overhead, and premium tax, and calculating and reporting required risk based capital.
In general, in another aspect, th
Callen Brock W.
Callen Hope C.
Fish & Richardson P.C.
Hayes John W.
Spincor LLC
Trammell James P.
LandOfFree
Providing termination benefits for employees does not yet have a rating. At this time, there are no reviews or comments for this patent.
If you have personal experience with Providing termination benefits for employees, we encourage you to share that experience with our LandOfFree.com community. Your opinion is very important and Providing termination benefits for employees will most certainly appreciate the feedback.
Profile ID: LFUS-PAI-O-2602599