Method, computer program product, and system for calculating a premium for stop loss insurance for a fleet of vehicles

• US 20050137914A1
• Filed: 12/07/2004
• Published: 06/23/2005
• Est. Priority Date: 12/23/2003
• Status: Abandoned Application

• Current Assignee: Swiss Reinsurance Company
• Original Assignee: Swiss Reinsurance Company
• Inventors: Faas, Henryk, Schmitter, Hans
• Application Number:
  US11/004,872
• Publication Number:
  US 20050137914A1
• Time in Patent Office: Days
• US Class Current: 705/4
• CPC Class Codes: G06Q 40/08 Insurance

Abstract

A premium for stop loss insurance for a fleet of vehicles is calculated as a stop loss premium for an assumed loss distribution having only losses with a value of one of zero and maximum individual loss. The stop loss premium is calculated based on a loss frequency, a maximum individual loss, and a deductible. The loss frequency is calculated by dividing an expected total loss by the maximum individual loss. Subsets of the fleet of vehicles are associated with different treaty durations. For each treaty duration a stop loss premium is calculated for the fleet of vehicles. Subsequently, for each treaty duration a premium is calculated for the subset of the fleet of vehicles associated with the treaty duration by weighting the stop loss premium, calculated for the fleet of vehicles, with the number of vehicles in the subset. Without having to store and process complex distributions of individual losses of the fleet of vehicles, a worst-case premium for stop loss insurance for the fleet of vehicles can be calculated. Repetitive steps used in the prior art for discretizing and processing distributions of individual losses can be eliminated, and thus, processing time and processing power can be reduced.

Claims

1. A computer-implemented method for calculating a premium for stop loss insurance for a fleet of vehicles, the method including:

determining an expected total loss for the fleet of vehicles;

storing in a computer a maximum individual loss equivalent to a cost of a most expensive vehicle of the fleet;

calculating by the computer a loss frequency by dividing the expected total loss by the maximum individual loss;

storing in the computer a deductible payable by an insurance holder; and

calculating by the computer the premium based on the loss frequency, the maximum individual loss, and the deductible as a stop loss premium for an assumed loss distribution having only losses with a value of one of zero and maximum individual loss.

2. The method according to claim 1, wherein the method further includes associating in the computer subsets of the fleet of vehicles with different treaty durations;

wherein for each treaty duration a separate premium is calculated by the computer for the subset of the fleet of vehicles associated with the treaty duration; and

wherein the premium for the fleet of vehicles is calculated by the computer by aggregating the separate premiums.

3. The method according to claim 1, wherein the method further includes associating in the computer subsets of the fleet of vehicles with different treaty durations;

wherein for each treaty duration a stop loss premium is calculated by the computer for the fleet of vehicles; and

wherein for each treaty duration a premium is calculated by the computer for the subset of the fleet of vehicles associated with the treaty duration by weighting the stop loss premium, calculated for the fleet of vehicles, with the number of vehicles in the subset.

4. The method according to claim 1, wherein the method further includes associating in the computer subsets of the fleet of vehicles with different treaty durations;

wherein for each treaty duration a duration-dependent loss frequency is calculated by the computer by dividing an expected total loss for the treaty duration by the maximum individual loss;

wherein a stop loss premium is calculated by the computer for the fleet of vehicles for each treaty duration based on the duration-dependent loss frequency, the maximum individual loss, and a deductible assigned to the treaty duration, the stop loss premium being calculated for an assumed loss distribution having only losses with a value of one of zero and maximum individual loss; and

wherein for each treaty duration a premium is calculated by the computer for the subset of the fleet of vehicles associated with the treaty duration by dividing the stop loss premium for the treaty duration by the total number of vehicles in the fleet and by the treaty duration, and by multiplying the stop loss premium for the treaty duration with the number of vehicles in the subset.

5. The method according to claim 1, wherein the method further includes calculating by the computer stop loss premiums for the fleet of vehicles for different treaty durations;

wherein for each treaty duration a stop loss premium per vehicle is calculated by the computer by dividing the stop loss premium, calculated for the treaty duration and for the fleet of vehicles, with the number of vehicles in the fleet;

wherein the method further includes associating in the computer subsets of the fleet of vehicles with the different treaty durations; and

wherein for each treaty duration a premium is calculated by the computer for the subset of the fleet of vehicles associated with the treaty duration by multiplying the stop loss premium per vehicle, calculated for the respective treaty duration, with the number of vehicles in the respective subset.

6. The method according to claim 1, wherein the method further includes associating in the computer subsets of the fleet of vehicles with different treaty durations;

wherein for each treaty duration a duration-dependent loss frequency is calculated by the computer by dividing an expected total loss for the treaty duration by the maximum individual loss, the expected total loss for a multi-year treaty duration being calculated by adding an expected total loss for each year included in the multi-year treaty.

7. The method according to claim 6, wherein an expected total loss for a first year of a multi-year treaty is calculated by the computer by multiplying an expected number of incidents, expected in the first year, with an average individual loss amount for an incident involving one of the vehicles;

wherein an expected total loss for one of the years after the first year of the multi-year treaty is calculated by the computer by multiplying an expected total loss of a preceding year with an index; and

wherein an expected total loss for the multi-year treaty is calculated by the computer by aggregating expected total losses for years included in the multi-year treaty.

8. The method according to claim 1, wherein the method further includes storing in the computer a maximum total insurance coverage, and calculating by the computer a premium excess based on the loss frequency, the maximum individual loss, and the maximum total insurance coverage as a stop loss premium for an assumed loss distribution having only losses with a value of one of zero and maximum individual loss;

and wherein calculating the premium includes subtracting at least a defined part of the premium excess from the premium.

9. The method according to claim 1, wherein the method further includes calculating by the computer the premium for defined values of the deductible and producing by the computer a graphical representation showing the premium as a function of the defined values of the deductible;

and wherein the deductible payable by the insurance holder is selected by an insurance holder based on the graphical representation.

10. The method according to claim 1, wherein determining the expected total loss includes entering and storing risk factors in the computer and calculating by the computer the expected total loss based on the risk factors;

and wherein the method further includes producing by the computer a graphical representation showing the premium as a function of the risk factors.

11. The method according to claim 1, wherein the method further includes calculating by the computer the premium for defined values of the expected number of incidents, and producing by the computer a graphical representation showing the premium as a function of the defined values of the expected number of incidents.

12. The method according to claim 1, wherein determining the expected total loss includes storing in the computer an expected number of incidents involving one of the vehicles, storing in the computer an expected average individual loss amount for an incident involving one of the vehicles, and calculating by the computer the expected total loss by multiplying the expected number of incidents with the expected average individual loss amount.

13. Computer program product comprising computer program code means for controlling one or more processors of a computer, such that the computer determines an expected total loss for a fleet of vehicles to be insured by stop loss insurance;

that the computer stores a maximum individual loss equivalent to a cost of a most expensive vehicle of the fleet;

that the computer calculates a loss frequency by dividing the expected total loss by the maximum individual loss;

that the computer stores a deductible payable by an insurance holder; and

that the computer calculates a premium for the insurance based on the loss frequency, the maximum individual loss, and the deductible as a stop loss premium for an assumed loss distribution having only losses with a value of one of zero and maximum individual loss.

14. The Computer program product according to claim 13, comprising further computer program code means for controlling the one or more processors of the computer such that the computer associates subsets of the fleet of vehicles with different treaty durations;

that the computer calculates for each treaty duration a separate premium for the subset of the fleet of vehicles associated with the treaty duration; and

that the computer calculates the premium for the fleet of vehicles by aggregating the separate premiums.

15. The Computer program product according to claim 13, comprising further computer program code means for controlling the one or more processors of the computer such that the computer associates subsets of the fleet of vehicles with different treaty durations;

that the computer calculates for each treaty duration a stop loss premium for the fleet of vehicles; and

that the computer calculates for each treaty duration a premium for the subset of the fleet of vehicles associated with the treaty duration by weighting the stop loss premium, calculated for the fleet of vehicles, with the number of vehicles in the subset.

16. The Computer program product according to claim 13, comprising further computer program code means for controlling the one or more processors of the computer such that the computer associates subsets of the fleet of vehicles with different treaty durations;

that the computer calculates for each treaty duration a duration-dependent loss frequency by dividing an expected total loss for the treaty duration by the maximum individual loss;

that the computer calculates a stop loss premium for the fleet of vehicles for each treaty duration based on the duration-dependent loss frequency, the maximum individual loss, and a deductible assigned to the treaty duration, the stop loss premium being calculated for an assumed loss distribution having only losses with a value of one of zero and maximum individual loss; and

that the computer calculates for each treaty duration a premium for the subset of the fleet of vehicles associated with the treaty duration by dividing the stop loss premium for the treaty duration by the total number of vehicles in the fleet and by the treaty duration, and by multiplying the stop loss premium for the treaty duration with the number of vehicles in the subset.

17. The Computer program product according to claim 13, comprising further computer program code means for controlling the one or more processors of the computer such that the computer calculates for different treaty durations a stop loss premium for the fleet of vehicles;

that the computer calculates for each treaty duration a stop loss premium per vehicle by dividing the stop loss premium, calculated for the treaty duration and for the fleet of vehicles, with the number of vehicles in the fleet;

that the computer associates subsets of the fleet of vehicles with the different treaty durations; and

that the computer calculates for each treaty duration a stop loss premium for the subset of the fleet of vehicles, associated with the treaty duration, by multiplying the stop loss premium per vehicle, calculated for the respective treaty duration, with the number of vehicles in the respective subset.

18. The Computer program product according to claim 13, comprising further computer program code means for controlling the one or more processors of the computer such that the computer associates subsets of the fleet of vehicles with different treaty durations;

that the computer calculates for each treaty duration a duration-dependent loss frequency by dividing an expected total loss for the treaty duration by the maximum individual loss, the expected total loss for a multi-year treaty duration being calculated by adding an expected total loss for each year included in the multi-year treaty.

19. The Computer program product according to claim 18, comprising further computer program code means for controlling the one or more processors of the computer such that the computer calculates an expected total loss for a first year of a multi-year treaty by multiplying an expected number of incidents, expected in the first year, with an average individual loss amount for an incident involving one of the vehicles;

that the computer calculates an expected total loss for one of the years after the first year of the multi-year treaty by multiplying an expected total loss of a preceding year with an index; and

that the computer calculates an expected total loss for the multi-year treaty by aggregating expected total losses for years included in the multi-year treaty.

20. The Computer program product according to claim 13, comprising further computer program code means for controlling the one or more processors of the computer such that the computer stores a maximum total insurance coverage;

that the computer calculates a premium excess based on the loss frequency, the maximum individual loss, and the maximum total insurance coverage as a stop loss premium for an assumed loss distribution having only losses with a value of one of zero and maximum individual loss; and

that the computer calculates the premium by subtracting at least a defined part of the premium excess from the premium.

21. The Computer program product according to claim 13, comprising further computer program code means for controlling the one or more processors of the computer such that the computer calculates the premium for defined values of the deductible and produces a graphical representation showing the premium as a function of the defined values of the deductible.

22. The Computer program product according to claim 13, comprising further computer program code means for controlling the one or more processors of the computer such that the computer receives and stores risk factors;

that the computer calculates the expected total loss based on the risk factors; and

that the computer produces a graphical representation showing the premium as a function of the risk factors.

23. The Computer program product according to claim 13, comprising further computer program code means for controlling the one or more processors of the computer such that the computer calculates the premium for defined values of the expected number of incidents and produces a graphical representation showing the premium as a function of the defined values of the expected number of incidents.

24. The Computer program product according to claim 13, comprising further computer program code means for controlling the one or more processors of the computer such that the computer stores an expected number of incidents involving one of the vehicles;

that the computer stores an expected average individual loss amount for an incident involving one of the vehicles; and

that the computer calculates the expected total loss by multiplying the expected number of incidents with the expected average individual loss amount.

25. A computer-based data processing system for calculating a premium for stop loss insurance for a fleet of vehicles, the system including:

means for determining an expected total loss for the fleet of vehicles;

means for storing a maximum individual loss equivalent to a cost of a most expensive vehicle of the fleet;

means for calculating a loss frequency by dividing the expected total loss by the maximum individual loss;

means for storing a deductible payable by an insurance holder; and

means for calculating the premium based on the loss frequency, the maximum individual loss, and the deductible as a stop loss premium for an assumed loss distribution having only losses with a value of one of zero and maximum individual loss.

26. The system according to claim 25, further including means for associating subsets of the fleet of vehicles with different treaty durations;

means for calculating for each treaty duration a separate premium for the subset of the fleet of vehicles associated with the treaty duration; and

means for calculating the premium for the fleet of vehicles by aggregating the separate premiums.

27. The system according to claim 25, further including means for associating subsets of the fleet of vehicles with different treaty durations;

means for calculating for each treaty duration a stop loss premium for the fleet of vehicles; and

means for calculating for each treaty duration a premium for the subset of the fleet of vehicles associated with the treaty duration by weighting the stop loss premium, calculated for the fleet of vehicles, with the number of vehicles in the subset.

28. The system according to claim 25, further including means for associating subsets of the fleet of vehicles with different treaty durations;

means for calculating for each treaty duration a duration-dependent loss frequency by dividing an expected total loss for the treaty duration by the maximum individual loss;

means for calculating a stop loss premium for the fleet of vehicles for each treaty duration based on the duration-dependent loss frequency, the maximum individual loss, and a deductible assigned to the treaty duration, the stop loss premium being calculated for an assumed loss distribution having only losses with a value of one of zero and maximum individual loss; and

means for calculating for each treaty duration a premium for the subset of the fleet of vehicles associated with the treaty duration by dividing the stop loss premium for the treaty duration by the total number of vehicles in the fleet and by the treaty duration, and by multiplying the stop loss premium for the treaty duration with the number of vehicles in the subset.

29. The system according to claim 25, further including means for calculating for different treaty durations stop loss premiums for the fleet of vehicles;

means for calculating for each treaty duration a stop loss premium per vehicle by dividing the stop loss premium, calculated for the treaty duration and for the fleet of vehicles, with the number of vehicles in the fleet;

means for associating subsets of the fleet of vehicles with the different treaty durations; and

means for calculating for each treaty duration a stop loss premium for the subset of the fleet of vehicles associated with the treaty duration by multiplying the stop loss premium per vehicle, calculated for the respective treaty duration, with the number of vehicles in the respective subset.

30. The system according to claim 25, further including means for associating subsets of the fleet of vehicles with different treaty durations;

means for calculating for each treaty duration a duration-dependent loss by dividing an expected total loss for the treaty duration by the maximum individual loss, the expected total loss for a multi-year treaty duration being calculated by adding an expected total loss for each year included in the multi-year treaty.

31. The system according to claim 30, further including means for calculating an expected total loss for a first year of a multi-year treaty by multiplying an expected number of incidents expected in the first year with an average individual loss amount for an incident involving one of the vehicles;

means for calculating an expected total loss for one of the years after the first year of the multi-year treaty by multiplying an expected total loss of a preceding year with an index; and

means for calculating an expected total loss for the multi-year treaty by aggregating expected total losses for years included in the multi-year treaty.

32. The system according to claim 25, further including means for storing a maximum total insurance coverage;

means for calculating a premium excess based on the loss frequency, the maximum individual loss, and the maximum total insurance coverage as a stop loss premium for an assumed loss distribution having only losses with a value of one of zero and maximum individual loss; and

means for calculating the premium by subtracting at least a defined part of the premium excess from the premium.

33. The system according to claim 25, further including means for calculating the premium for defined values of the deductible;

and means for producing a graphical representation showing the premium as a function of the defined values of the deductible.

34. The system according to claim 25, further including means for receiving and storing risk factors;

means for calculating the expected total loss based on the risk factors; and

means for producing a graphical representation showing the premium as a function of the risk factors.

35. The system according to claim 25, further including means for calculating the premium for defined values of the expected number of incidents;

and

means for producing a graphical representation showing the premium as a function of the defined values of the expected number of incidents.

36. The system according to claim 25, further including means for storing an expected number of incidents involving one of the vehicles;

means for storing an expected average individual loss amount for an incident involving one of the vehicles; and

means for calculating the expected total loss by multiplying the expected number of incidents with the expected average individual loss amount.