Premium transition factor
First Claim
1. A method for transitioning a block of insureds from a first rating algorithm A to a second rating algorithm B, said block of insureds comprising one or more insured drivers, said method comprising:
- a) selecting a length of transition period no; and
b) charging each one of said insured drivers a premium for a given term n during said transition period wherein said premium is greater than or equal to the premium Ptn given by the equation;
Ptn=Pbn−
Tfn*(Pbn−
Pao) wherein;
i. Pbn is the premium for term n of the transition period calculated by said algorithm B;
ii. Tfn is a transition factor for term n; and
iii. Pao is the premium for term 0 of said transition period calculated by said algorithm A;
and wherein Tfn is chosen such that the change in said premium Ptn from the prior premium Pt(n−
1) is a normal change in premium for the majority of said insured drivers.
1 Assignment
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Accused Products
Abstract
Auto insurance customers can be transitioned from an initial rating algorithm A to a subsequent algorithm B by phasing in the transition over a period of several years. The premium charged during the transition period is equal to the premium calculated under the rating algorithm B minus a premium adjustment. The premium adjustment is given by the difference between the premium according to algorithm B minus the legacy premium from algorithm A, said difference being multiplied by a rating transition factor. The rating transition factor may be a linearly decreasing function which has a value of 1 just before the transition period and a value of zero at the end of the transition period. The transition period may be in the range of 3 to 8 years long.
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Citations
4 Claims
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1. A method for transitioning a block of insureds from a first rating algorithm A to a second rating algorithm B, said block of insureds comprising one or more insured drivers, said method comprising:
-
a) selecting a length of transition period no; and
b) charging each one of said insured drivers a premium for a given term n during said transition period wherein said premium is greater than or equal to the premium Ptn given by the equation;
Ptn=Pbn−
Tfn*(Pbn−
Pao)wherein;
i. Pbn is the premium for term n of the transition period calculated by said algorithm B;
ii. Tfn is a transition factor for term n; and
iii. Pao is the premium for term 0 of said transition period calculated by said algorithm A;
and wherein Tfn is chosen such that the change in said premium Ptn from the prior premium Pt(n−
1) is a normal change in premium for the majority of said insured drivers. - View Dependent Claims (2, 3, 4)
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Specification