System and process for detecting outliers for insurance underwriting suitable for use by an automated system

• US 20040220838A1
• Filed: 04/30/2003
• Published: 11/04/2004
• Est. Priority Date: 04/30/2003
• Status: Active Grant

• Current Assignee: Pacific Life Insurance Company (Pacific Mutual Holding Company)
• Original Assignee: GE Financial Assurance Holdings Incorporated (General Electric Company)
• Inventors: Bonissone, Piero Patrone, Iyer, Naresh Sundaram
• Granted Patent: US 7,801,748 B2
• Time in Patent Office: Days
• US Class Current: 705/4
• CPC Class Codes: G06Q 40/08 Insurance

Abstract

An outlier detector that exploits the existing risk structure of the decision problem in order to discover risk assignments that are globally inconsistent is described. The technique works on a set of candidates for which risk categories have already been assigned. In the case of insurance underwriting, the invention pertains to the premium class assigned to an application. For this set of labeled candidates, the system finds all such pairs of applications belonging to different risk categories, which violate the principle of dominance. The invention matches the risk ordering of the applications with the ordering imposed by dominance and uses any mismatch during the process to identify applications that were potentially assigned incorrect risk categories.

Claims

1. A process for preparing an insurance application for underwriting based on a plurality of previous insurance application underwriting decisions, the process comprising:

receiving a request to underwrite the insurance application;

assigning a risk classification to the insurance application;

defining a set comprising at least one of the plurality of previous insurance application underwriting decisions;

comparing the insurance application to the set; and

designating the insurance application based at least in part on the comparison between the insurance application and the set and the risk classification assigned to the insurance application, where the designation is one of;

designating the insurance application as an outlier insurance application; and

designating the insurance application for underwriting.

2. The process according to claim 1, wherein the insurance application comprises at least one feature;

and

where comparing the insurance application to the set further comprises;

comparing at least one feature of the insurance application to a corresponding feature in the at least one of the plurality of previous insurance application underwriting decisions in the set.

3. The process according to claim 2, where:

comparing the at least one feature to a corresponding feature in the set further comprises determining if the at least one feature in the insurance application is dominated by the corresponding feature in the first set.

4. The process according to claim 1, wherein comparing the insurance application to the set further comprises:

determining if the insurance application is dominated by the at least one application in the first set.

5. The process according to claim 1, wherein comparing the insurance application to the set further comprises:

comparing the classification assignment of the insurance application to the classification assignment of the at least one of the plurality of previous insurance application underwriting decisions in the set.

6. The process according to claim 1, where the at least one insurance application in the set includes a classification assignment;

and

where designating the insurance application as an outlier insurance application occurs when a dominance relationship between the insurance application and one of the at least one insurance application in the set is inconsistent with the relationship of the classification assignments between the insurance application and the one of the at least one insurance application in the set.

7. A process for preparing an insurance application for underwriting based on a plurality of previous insurance application underwriting decisions, the process comprising:

receiving a request to underwrite the insurance application, wherein the insurance application comprises at least one feature;

assigning a risk classification to the insurance application;

defining a set comprising at least one of the plurality of previous insurance application underwriting decisions;

comparing the insurance application to the set, where comparing comprises;

comparing at least one feature of the insurance application to a corresponding feature in the at least one of the plurality of previous insurance application underwriting decisions in the set; and

comparing the classification assignment of the insurance application to the classification assignment of the at least one of the plurality of previous insurance application underwriting decisions in the set; and

designating the insurance application based at least in part on the comparison between the insurance application and the set and the risk classification assigned to the insurance application, where the designation is one of;

designating the insurance application as an outlier insurance application; and

designating the insurance application for underwriting.

8. The process according to claim 7, where:

comparing the at least one feature to a corresponding feature in the set further comprises determining if the at least one feature in the insurance application is dominated by the corresponding feature in the set.

9. The process according to claim 7, where designating the insurance application as an outlier insurance application occurs when a dominance relationship between the insurance application and one of the at least one insurance application in the set is inconsistent with the relationship of the classification assignments between the insurance application and the one of the at least one insurance application in the set.

10. A computer readable medium having code for causing a processor to prepare an insurance application for underwriting based on a plurality of previous insurance application underwriting decisions, the medium comprising:

code for receiving a request to underwrite the insurance application;

code for assigning a risk classification to the insurance application;

code for defining a set comprising at least one of the plurality of previous insurance application underwriting decisions;

code for comparing the insurance application to the set; and

code for designating the insurance application based at least in part on the comparison between the insurance application and the set and the risk classification assigned to the insurance application, where the designation is one of;

designating the insurance application as an outlier insurance application; and

designating the insurance application for underwriting.

11. The medium according to claim 10, wherein the insurance application comprises at least one feature;

and

where the code for comparing the insurance application to the set further comprises;

code for comparing at least one feature of the insurance application to a corresponding feature in the at least one of the plurality of previous insurance application underwriting decisions in the set.

12. The medium according to claim 11, where:

the code for comparing the at least one feature to a corresponding feature in the set further comprises determining if the at least one feature in the insurance application is dominated by the corresponding feature in the set.

13. The medium according to claim 10, wherein the code for comparing the insurance application to each of the set further comprises:

code for determining if the insurance application is dominated by the at least one application in the set.

14. The medium according to claim 10, wherein the code for comparing the insurance application to each of the set further comprises:

code for comparing the classification assignment of the insurance application to the classification assignment of the at least one of the plurality of previous insurance application underwriting decisions in the set.

15. The medium according to claim 10, where the at least one insurance application in the set includes a classification assignment;

and

where designating the insurance application as an outlier insurance application occurs when a dominance relationship between the insurance application and one of the at least one insurance application in the set is inconsistent with the relationship of the classification assignments between the insurance application and the one of the at least one insurance application in the set.

16. A computer readable medium having code for causing a processor to prepare an insurance application for underwriting based on a plurality of previous insurance application underwriting decisions, the medium comprising:

code for receiving a request to underwrite the insurance application, wherein the insurance application comprises at least one feature;

code for assigning a risk classification to the insurance application;

code for defining a set comprising at least one of the plurality of previous insurance application underwriting decisions;

code for comparing the insurance application to the set, where the code for comparing comprises;

code for comparing at least one feature of the insurance application to a corresponding feature in the at least one of the plurality of previous insurance application underwriting decisions in the set; and

code for comparing the classification assignment of the insurance application to the classification assignment of the at least one of the plurality of previous insurance application underwriting decisions in the set; and

code for designating the insurance application based at least in part on the comparison between the insurance application and the set and the risk classification assigned to the insurance application, where the designation is one of;

designating the insurance application as an outlier insurance application; and

designating the insurance application for underwriting.

17. The medium according to claim 16, where:

the code for comparing the at least one feature to a corresponding feature in the set further comprises code for determining if the at least one feature in the insurance application is dominated by the corresponding feature in the set.

18. The medium according to claim 16 , where designating the insurance application as an outlier insurance application occurs when a dominance relationship between the insurance application and one of the at least one insurance application in the set is inconsistent with the relationship of the classification assignments between the insurance application and the one of the at least one insurance application in the set.

19. A system to prepare an insurance application for underwriting based on a plurality of previous insurance application underwriting decisions, the system comprising:

means for receiving a request to underwrite the insurance application;

means for assigning a risk classification to the insurance application;

means for defining a set comprising at least one of the plurality of previous insurance application underwriting decisions;

means for comparing the insurance application to the set; and

means for designating the insurance application based at least in part on the comparison between the insurance application and the set and the risk classification assigned to the insurance application, where the designation is one of;

designating the insurance application as an outlier insurance application; and

designating the insurance application for underwriting.

20. The system according to claim 19, wherein the insurance application comprises at least one feature;

and

where the means for comparing the insurance application to the set further comprises;

means for comparing at least one feature of the insurance application to a corresponding feature in the at least one of the plurality of previous insurance application underwriting decisions in the set.

21. The system according to claim 20, where:

the means for comparing the at least one feature to a corresponding feature in the set further comprises determining if the at least one feature in the insurance application is dominated by the corresponding feature in the set.

22. The system according to claim 19, wherein the means for comparing the insurance application to the set further comprises:

means for determining if the insurance application is dominated by the at least one application in the set.

23. The system according to claim 19, wherein the means for comparing the insurance application to the set further comprises:

means for comparing the classification assignment of the insurance application to the classification assignment of the at least one of the plurality of previous insurance application underwriting decisions in the set.

24. The system according to claim 19, where the at least one insurance application in the set includes a classification assignment;

and

where designating the insurance application as an outlier insurance application occurs when a dominance relationship between the insurance application and one of the at least one insurance application in the set is inconsistent with the relationship of the classification assignments between the insurance application and the one of the at least one insurance application in the set.

25. A system to prepare an insurance application for underwriting based on a plurality of previous insurance application underwriting decisions, the system comprising:

means for receiving a request to underwrite the insurance application, wherein the insurance application comprises at least one feature;

means for assigning a risk classification to the insurance application;

means for defining a set comprising at least one of the plurality of previous insurance application underwriting decisions;

means for comparing the insurance application to the set, where the code for comparing comprises;

means for comparing at least one feature of the insurance application to a corresponding feature in the at least one of the plurality of previous insurance application underwriting decisions in the set; and

means for comparing the classification assignment of the insurance application to the classification assignment of the at least one of the plurality of previous insurance application underwriting decisions in the set; and

means for designating the insurance application based at least in part on the comparison between the insurance application and the set and the risk classification assigned to the insurance application, where the designation is one of;

designating the insurance application as an outlier insurance application; and

designating the insurance application for underwriting.

26. The system according to claim 25, where:

the means for comparing the at least one feature to a corresponding feature in the set further comprises code for determining if the at least one feature in the insurance application is dominated by the corresponding feature in the set.

27. The system according to claim 25, where designating the insurance application as an outlier insurance application occurs when a dominance relationship between the insurance application and one of the at least one insurance application in the set is inconsistent with the relationship of the classification assignments between the insurance application and the one of the at least one insurance application in the set.

28. A system to prepare an insurance application for underwriting based on a plurality of previous insurance application underwriting decisions, the system comprising:

a receiver for receiving a request to underwrite the insurance application;

a classifier module assigning a risk classification to the insurance application;

a definition module for defining a set comprising at least one of the plurality of previous insurance application underwriting decisions; and

a comparison module comparing the insurance application to the set; and

a designation module for designating the insurance application based at least in part on the comparison between the insurance application and the set and the risk classification assigned to the insurance application, where the designation is one of;

designating the insurance application as an outlier insurance application; and

designating the insurance application for underwriting.

29. The system according to claim 28, wherein the insurance application comprises at least one feature;

and

where the comparison module further compares at least one feature of the insurance application to a corresponding feature in the at least one of the plurality of previous insurance application underwriting decisions in the set.

30. The system according to claim 29, where:

the comparison module further determines if the at least one feature in the insurance application is dominated by the corresponding feature in the set.

31. The system according to claim 28, wherein the comparing module further determines if the insurance application is dominated by the at least one application in the set.

32. The system according to claim 28, wherein the comparison module further compares the classification assignment of the insurance application to the classification assignment of the at least one of the plurality of previous insurance application underwriting decisions in the set.

33. The system according to claim 28, where the at least one insurance application in the set includes a classification assignment;

and

where designating the insurance application as an outlier insurance application occurs when a dominance relationship between the insurance application and one of the at least one insurance application in the set is inconsistent with the relationship of the classification assignments between the insurance application and the one of the at least one insurance application in the set.

34. A system for preparing an insurance application for underwriting based on a plurality of previous insurance application underwriting decisions, the system comprising:

a receiver for receiving a request to underwrite the insurance application, wherein the insurance application comprises at least one feature;

a classifier module for assigning a risk classification to the insurance application;

a definition module for defining a set comprising at least one of the plurality of previous insurance application underwriting decisions; and

a comparison module for;

a) comparing the insurance application to the to the set;

b) comparing at least one feature of the insurance application to a corresponding feature in the at least one of the plurality of previous insurance application underwriting decisions in the set;

c) comparing the classification assignment of the insurance application to the classification assignment of the at least one of the plurality of previous insurance application underwriting decisions in the set; and

a designation module for designating the insurance application based at least in part on the comparison between the insurance application and the set and the risk classification assigned to the insurance application, where the designation is one of;

designating the insurance application as an outlier insurance application; and

designating the insurance application for underwriting.

35. The system according to claim 34, where:

the comparison module further determines if the at least one feature in the insurance application is dominated by the corresponding feature in the first set.

36. The system according to claim 34, where designating the insurance application as an outlier insurance application occurs when a dominance relationship between the insurance application and one of the at least one insurance application in the set is inconsistent with the relationship of the classification assignments between the insurance application and the one of the at least one insurance application in the set.