Method of determining prior net benefit of obtaining additional risk data for insurance purposes via survey or other procedure

• US 20070043662A1
• Filed: 08/24/2006
• Published: 02/22/2007
• Est. Priority Date: 08/19/2005
• Status: Active Grant

• Current Assignee: Hartford Steam Boiler Inspection and Insurance Company (Münchener Rückversicherungs-Gesellschaft AG)
• Original Assignee: Hartford Steam Boiler Inspection and Insurance Company (Münchener Rückversicherungs-Gesellschaft AG)
• Inventors: Lancaster, Clifton
• Granted Patent: US 8,538,865 B2
• Time in Patent Office: Days
• US Class Current: 705/38
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis
• CPC Class Codes: G06Q 40/08 Insurance

Abstract

A method is disclosed for determining the prior net benefit of obtaining data relating to an individual risk in an insurance portfolio, via a survey or similar procedure. A risk model is developed at the individual risk level for mathematically estimating the probability of expected loss given a set of information about the risk. The risk model is incorporated into a profitability model. A probability distribution relating to the type of survey information to be obtained is developed, which is used for determining the gross value of obtaining the information. The method produces as an output a quantitative estimation (e.g., dollar value) of the net benefit of obtaining survey data for the risk, calculated as the gross value of the survey less the survey'"'"'s cost, where the benefit of the survey relates to a quantitative increase in predictive accuracy resulting from incorporating the survey data into the predictive model.

Claims

1. A method for determining the a priori benefit of an insurance survey, said method comprising the steps of:

obtaining at least one probability distribution of information to be obtained by a survey, said information relating to at least one insurance risk; and

determining a gross value of the information based at least in part on said at least one probability distribution and a profitability model associated with said information.

2. The method of claim 1 further comprising:

determining a cost associated with the survey; and

determining a net value of the information as the gross value less the cost.

3. The method of claim 2 further comprising:

determining whether to conduct the survey based at least in part on the net value.

4. The method of claim 3 wherein the gross value is further based at least in part on a retention model for said at least one insurance risk, said retention model incorporating information relating to terms of an insurance contact for said at least one insurance risk.

5. The method of claim 3 further comprising:

conducting the survey if the net value is a positive monetary value.

6. The method of claim 1 wherein the profitability model incorporates a risk model associated with said at least one insurance risk, said risk model setting forth an expected insurance loss of said at least one insurance risk given one or more characteristics of said at least one insurance risk.

7. The method of claim 6 wherein the risk model is a Bayesian predictive model.

8. An insurance survey method comprising the steps of:

calculating the net value of obtaining information through a survey prior to carrying out the survey, said information relating to at least one insurance risk; and

determining whether to conduct the survey based at least in part on the net value.

9. The method of claim 8 further comprising:

obtaining at least one probability distribution of the information to be obtained by the survey; and

calculating a gross value of the information based at least in part on said at least one probability distribution and a profitability model associated with said information, wherein the net value is based at least in part on the gross value.

10. The method of claim 9 further comprising:

determining a cost associated with the survey, wherein the net value is calculated as the gross value less the cost.

11. The method of claim 10 wherein the gross value is further based at least in part on a retention model for said at least one insurance risk, said retention model incorporating information relating to terms of an insurance contact for said at least one insurance risk.

12. The method of claim 9 wherein the profitability model incorporates a risk model associated with said at least one insurance risk, said risk model setting forth an expected insurance loss of said at least one insurance risk given one or more characteristics of said at least one insurance risk.

13. The method of claim 12 wherein the risk model is a Bayesian predictive model.

14. The method of claim 8 further comprising:

conducting the survey if the net value is a positive monetary value.

15. An insurance survey method comprising the steps of:

calculating a monetary value associated with information to be obtained by way of a survey procedure, prior to conducting the survey procedure, wherein the information relates to at least one insurance risk; and

determining whether to conduct the survey based at least in part on the calculated monetary value.

16. The method of claim 15 further comprising:

obtaining at least one probability distribution of said information; and

calculating a gross value of the information based at least in part on said at least one probability distribution and a profitability model associated with said information, wherein the monetary value is a net value calculated based at least in part on the gross value.

17. The method of claim 16 further comprising:

determining a cost associated with the survey procedure, wherein the net value is calculated as the gross value less the cost.

18. The method of claim 17 wherein the gross value is further based at least in part on a retention model for said at least one insurance risk, said retention model incorporating information relating to terms of an insurance contact for said at least one insurance risk.

19. The method of claim 16 wherein the profitability model incorporates a risk model associated with said at least one insurance risk, said risk model setting forth an expected insurance loss of said at least one insurance risk given one or more characteristics of said at least one insurance risk.

20. The method of claim 19 wherein the risk model is a Bayesian predictive model.