System and method for catastrophic risk assessment

• US 20040186753A1
• Filed: 03/21/2003
• Published: 09/23/2004
• Est. Priority Date: 03/21/2003
• Status: Abandoned Application

• Current Assignee: Genworth Financial Incorporated
• Original Assignee: Genworth Financial Incorporated
• Inventors: Lin, Robert, Kim, David, DʼAquilla, Gary
• Application Number:
  US10/393,461
• Publication Number:
  US 20040186753A1
• Time in Patent Office: Days
• US Class Current: 705/4
• CPC Class Codes: G06Q 40/08 Insurance

Abstract

The present invention provides a system and methodology for quantification of insurance risks from a variety of catastrophic events in one or more geographic locations. A probability distribution for a given catastrophic event is developed. A potential claim distribution of the given event is developed. A geographic distribution of an insurance company'"'"'s issued policies related to the event is developed. Probabilistic models are built and stochastic simulations carried out to quantify the company'"'"'s insurance risk due to the catastrophic event. The assessment may be in the form of expected insurance payout, a stated risk level and/or net income impact. Decisions can then be made, based on the invention results, to adjust the related policy premiums or to purchase third-party reinsurance protection against the catastrophic event.

Claims

1. A method for assessing an insurance company'"'"'s risk due to a plurality of catastrophic events, the method comprising

determining a probability distribution for at least one catastrophic event occurring in at least one geographic location;

determining a potential claim rate due to the at least one catastrophic event occurring in the at least one geographic location;

acquiring information related to the insurance company'"'"'s issued insurance policies within the at least one geographic location; and

computing a probability distribution of expected insurance payout by the insurance company due to the at least one catastrophic event occurring in the at least one geographic location.

2. The method according to claim 1, wherein the computed probability distribution of expected insurance payout is based on at least one of:

the probability distribution for the at least one catastrophic event occurring in the at least one geographic location;

potential claim rate due to the at least one catastrophic event occurring in the at least one geographic location; and

the information related to the insurance company'"'"'s issued life insurance policies.

3. The method according to claim 1, wherein the insurance company'"'"'s issued insurance policies are life insurance policies.

4. The method according to claim 1, wherein the plurality of catastrophic events comprising at least one of:

a) an earthquake;

b) a hurricane;

c) a tornado;

d) a terrorist attack;

e) other natural or man-made event that involves loss of properties or human lives.

5. The method according to claim 1, wherein computing a probability distribution of expected insurance payout by the insurance company further comprising

building a probabilistic model;

and

performing a stochastic simulation based on the probabilistic model.

6. The method according to claim 1, further comprising generating a presentation of the probability distribution of expected insurance payout by the insurance company due to the at least one catastrophic event occurring in the at least one geographic location.

7. The method according to claim 1, further comprising adjusting insurance premiums, based on the probability distribution of expected insurance payout by the insurance company due to the at least one catastrophic event occurring in the at least one geographic location.

8. The method according to claim 1, further comprising purchasing reinsurance protection against the at least one catastrophic event, based on the probability distribution of expected insurance payout by the insurance company due to the at least one catastrophic event occurring in the at least one geographic location.

9. The method according to claim 1, further comprising

acquiring information related to insurance expenses and taxes, wherein the insurance expenses and taxes are associated with the at least one catastrophic event occurring in the at least one geographic location;

computing an impact on the insurance company'"'"'s net income due to the at least one catastrophic event occurring in the at least one geographic location.

10. The method according to claim 9, further comprising generating a presentation of the impact on the insurance company'"'"'s net income due to the at least one catastrophic event occurring in the at least one geographic location.

11. The method according to claim 9, further comprising adjusting insurance premiums, based on the impact on the insurance company'"'"'s net income due to the at least one catastrophic event occurring in the at least one geographic location.

12. The method according to claim 9, further comprising determining the required level of reinsurance protection and purchasing the aforementioned protection against the least one catastrophic event, based on the impact on the insurance company'"'"'s net income due to the at least one catastrophic event occurring in the at least one geographic location.

13. A computer usable medium having computer readable program code embodied therein for assessing an insurance company'"'"'s risk due to a plurality of catastrophic events, said computer readable program code comprising

code for determining a probability distribution for at least one catastrophic event occurring in at least one geographic location;

code for determining a potential claim rate due to the at least one catastrophic event occurring in the at least one geographic location;

code for acquiring information related to the insurance company'"'"'s issued insurance policies within the at least one geographic location; and

code for computing a probability distribution of expected insurance payout by the insurance company due to the at least one catastrophic event occurring in the at least one geographic location.

14. The computer usable medium according to claim 13, wherein the computed probability distribution of expected insurance payout is based on at least one of:

the probability distribution for the at least one catastrophic event occurring in the at least one geographic location;

potential claim rate due to the at least one catastrophic event occurring in the at least one geographic location; and

the information related to the insurance company'"'"'s issued life insurance policies.

15. The computer usable medium according to claim 13, wherein the insurance company'"'"'s issued insurance policies are life insurance policies.

16. The computer usable medium according to claim 13, wherein the plurality of catastrophic events comprising at least one of:

a) an earthquake;

b) a hurricane;

c) a tornado;

d) a terrorist attack;

e) other natural or man-made event that involves loss of properties or human lives.

17. The computer usable medium according to claim 13, wherein the code for computing a probability distribution of expected insurance payout by the insurance company further comprising

code for building a probabilistic model;

and

code for performing a stochastic simulation based on the probabilistic model.

18. The computer usable medium according to claim 13, further comprising code for generating a presentation of the probability distribution of expected insurance payout by the insurance company due to the at least one catastrophic event occurring in the at least one geographic location.

19. The computer usable medium according to claim 13, further comprising code for adjusting insurance premiums, based on the probability distribution of expected insurance payout by the insurance company due to the at least one catastrophic event occurring in the at least one geographic location.

20. The computer usable medium according to claim 13, further comprising code for purchasing reinsurance protection against the at least one catastrophic event, based on the probability distribution of expected insurance payout by the insurance company due to the at least one catastrophic event occurring in the at least one geographic location.

21. The computer usable medium according to claim 13, further comprising

code for acquiring information related to insurance expenses and taxes, wherein the insurance expenses and taxes are associated with the at least one catastrophic event occurring in the at least one geographic location;

code for computing an impact on the insurance company'"'"'s net income due to the at least one catastrophic event occurring in the at least one geographic location.

22. The computer usable medium according to claim 21, further comprising code for generating a presentation of the impact on the insurance company'"'"'s net income due to the at least one catastrophic event occurring in the at least one geographic location.

23. The computer usable medium according to claim 21, further comprising code for adjusting insurance premiums, based on the impact on the insurance company'"'"'s net income due to the at least one catastrophic event occurring in the at least one geographic location.

24. The computer usable medium according to claim 21, further comprising determining the required level of reinsurance protection and purchasing the aforementioned protection against the least one catastrophic event, based on the impact on the insurance company'"'"'s net income due to the at least one catastrophic event occurring in the at least one geographic location.

25. A system for assessing an insurance company'"'"'s risk due to a plurality of catastrophic events, the system comprising

means for determining a probability distribution for at least one catastrophic event occurring in at least one geographic location;

means for determining a potential claim rate due to the at least one catastrophic event occurring in the at least one geographic location;

means for acquiring information related to the insurance company'"'"'s issued insurance policies within the at least one geographic location; and

means for computing a probability distribution of expected insurance payout by the insurance company due to the at least one catastrophic event occurring in the at least one geographic location.

26. The system according to claim 25, wherein the computed probability distribution of expected insurance payout is based on at least one of:

the probability distribution for the at least one catastrophic event occurring in the at least one geographic location;

potential claim rate due to the at least one catastrophic event occurring in the at least one geographic location; and

the information related to the insurance company'"'"'s issued life insurance policies.

27. The system according to claim 25, wherein the insurance company'"'"'s issued insurance policies are life insurance policies.

28. The system according to claim 25, wherein the plurality of catastrophic events comprising at least one of:

a) an earthquake;

b) a hurricane;

c) a tornado;

d) a terrorist attack;

e) other natural or man-made event that involves loss of properties or human lives.

29. The system according to claim 25, wherein the means for computing a probability distribution of expected insurance payout by the insurance company further comprising

means for building a probabilistic model;

and

means for performing a stochastic simulation based on the probabilistic model.

30. The system according to claim 25, further comprising means for generating a presentation of the probability distribution of expected insurance payout by the insurance company due to the at least one catastrophic event occurring in the at least one geographic location.

31. The system according to claim 25, further comprising means for adjusting insurance premiums, based on the probability distribution of expected insurance payout by the insurance company due to the at least one catastrophic event occurring in the at least one geographic location.

32. The system according to claim 25, further comprising means for determining the required level of reinsurance protection and purchasing the aforementioned protection against the at least one catastrophic event, based on the probability distribution of expected insurance payout by the insurance company due to the at least one catastrophic event occurring in the at least one geographic location.

33. The system according to claim 25, further comprising

means for acquiring information related to insurance expenses and taxes, wherein the insurance expenses and taxes are associated with the at least one catastrophic event occurring in the at least one geographic location;

means for computing an impact on the insurance company'"'"'s net income due to the at least one catastrophic event occurring in the at least one geographic location.

34. The system according to claim 33, further comprising means for generating a presentation of the impact on the insurance company'"'"'s net income due to the at least one catastrophic event occurring in the at least one geographic location.

35. The system according to claim 33, further comprising means for adjusting insurance premiums, based on the impact on the insurance company'"'"'s net income due to the at least one catastrophic event occurring in the at least one geographic location.

36. The system according to claim 33, further comprising means for purchasing reinsurance protection against the least one catastrophic event, based on the impact on the insurance company'"'"'s net income due to the at least one catastrophic event occurring in the at least one geographic location.

37. A system for assessing an insurance company'"'"'s risk due to a plurality of catastrophic events, the system comprising

a first determination module for determining a probability distribution for at least one catastrophic event occurring in at least one geographic location;

a second determination module for determining a potential claim rate due to the at least one catastrophic event occurring in the at least one geographic location;

an acquisition module for acquiring information related to the insurance company'"'"'s issued insurance policies within the at least one geographic location; and

a computation module for computing a probability distribution of expected insurance payout by the insurance company due to the at least one catastrophic event occurring in the at least one geographic location.

38. The system according to claim 37, wherein the computed probability distribution of expected insurance payout is based on at least one of:

the probability distribution for the at least one catastrophic event occurring in the at least one geographic location;

potential claim rate due to the at least one catastrophic event occurring in the at least one geographic location; and

the information related to the insurance company'"'"'s issued life insurance policies.

39. The system according to claim 37, wherein the insurance company'"'"'s issued insurance policies are life insurance policies.

40. The system according to claim 37, wherein the plurality of catastrophic events comprising at least one of:

a) an earthquake;

b) a hurricane;

c) a tornado;

d) a terrorist attack;

e) other natural or man-made event that involves loss of properties or human lives.

41. The system according to claim 37, wherein the computation module for computing a probability distribution of expected insurance payout by the insurance company further comprising

a building module for building a probabilistic model;

and

a simulation module for performing a stochastic simulation based on the probabilistic model.

42. The system according to claim 37, further comprising a generation module for generating a presentation of the probability distribution of expected insurance payout by the insurance company due to the at least one catastrophic event occurring in the at least one geographic location.

43. The system according to claim 37, further comprising an adjusting module for adjusting insurance premiums, based on the probability distribution of expected insurance payout by the insurance company due to the at least one catastrophic event occurring in the at least one geographic location.

44. The system according to claim 37, further comprising a purchasing module for purchasing reinsurance protection against the at least one catastrophic event, based on the probability distribution of expected insurance payout by the insurance company due to the at least one catastrophic event occurring in the at least one geographic location.

45. The system according to claim 37, further comprising

a acquisition module for acquiring information related to insurance expenses and taxes, wherein the insurance expenses and taxes are associated with the at least one catastrophic event occurring in the at least one geographic location;

a computation module for computing an impact on the insurance company'"'"'s net income due to the at least one catastrophic event occurring in the at least one geographic location.

46. The system according to claim 45, further comprising a generation module for generating a presentation of the impact on the insurance company'"'"'s net income due to the at least one catastrophic event occurring in the at least one geographic location.

47. The system according to claim 45, further comprising an adjusting module for adjusting insurance premiums, based on the impact on the insurance company'"'"'s net income due to the at least one catastrophic event occurring in the at least one geographic location.

48. The system according to claim 45, further comprising a purchasing module for determining the required level of reinsurance protection and purchasing the aforementioned protection against the least one catastrophic event, based on the impact on the insurance company'"'"'s net income due to the at least one catastrophic event occurring in the at least one geographic location.