Method and system of insuring risk

• US 20100036684A1
• Filed: 05/15/2009
• Published: 02/11/2010
• Est. Priority Date: 05/15/2008
• Status: Active Grant

• Current Assignee: American International Group Incorporated
• Original Assignee: American International Group Incorporated
• Inventors: McNamee, Jacqueline, Mucerino, Ralph, Willliams, Guy
• Granted Patent: US 8,260,638 B2
• Time in Patent Office: Days
• US Class Current: 705/4
• CPC Class Codes: G06Q 40/08 Insurance

Abstract

A method for underwriting an insurance product includes identifying a plurality of event categories of operational risk loss and drafting information requests for operational risk management components thereof. A database of the insurance company for stores and analyzes information provided by the client to yield an operational risk exposure assessment of the client.

Claims

1. A method for underwriting an insurance product provided by an insurance company having servers and other electronic storage and computational devices for storing, retrieving, and processing information, the insurance product directed to insuring assets, the retention of which is governed by legislation, against operational risk of a client controlling the assets and engaged in transacting business in an industry, the method comprising the steps of:

identifying a plurality of event categories of operational risk loss based on pertinent legislative regulations of the industry, and creating a table in electronic form by use of a computer operating a word processing and a spreadsheet program;

identifying at least one operational risk management component for each of the seven event categories, and updating the table to include the same;

drafting at least one information request for each of the operational risk management components, and creating a checklist in electronic form by use of a computer operating the word processing and the spreadsheet program that includes the at least one information request;

electronically transferring the table and the checklist from the servers of the insurance company to servers of the client;

creating a database infrastructure on the servers of the insurance company for storing and analyzing information provided by the client;

populating the database infrastructure with client information provided by the client in response to the at least one information request;

analyzing the client information by retrieving portions thereof from the database infrastructure and analyzing said portions using word processing and spreadsheet software applications operating on the servers of the insurance company;

determining an operational risk exposure assessment based on the client information stored in the database infrastructure.

2. The method of claim 1, further including the steps of:

drafting a proposal for the insurance product based, at least in part, on the operational risk exposure assessment; and

transmitting the proposal from the servers of the insurance company to the servers of the client for electronic storage and retrieval.

3. The method of claim 1, wherein the plurality of event categories includes at least one of the following seven event categories:

a) governance of a client organization;

b) risk identification and assessment procedures of the client;

c) risk monitoring procedures of the client;

d) reporting procedures of the client;

e) quantification of risk exposure by the client;

f) risk appetite and risk aversion policies of the client; and

g) assess use systems and controls of the client.

4. The method of claim 1, wherein identification of the plurality of event categories further includes the steps of:

identifying a plurality of indicators indicative of an extend of organizational maturity of the client;

drafting at least one additional information request for each of the plurality of indicators; and

augmenting the checklist with the at least one additional information request.

5. The method of claim 1, wherein identification of the plurality of event categories further includes the step of identifying risk categories based on general underwriting considerations, which are selected from the list consisting of governance of the client, investment banking activity of the client, treasury and trading activity of the client, and audit procedures of the client.

6. The method of claim 1, wherein step of analyzing the client information includes providing a plurality of scores, each of which corresponds to one of the plurality of event categories and ranking the client with a score of between one and seven, wherein each of the scores is plotted on a radial chart using an electronic data manipulator application operating on the servers of the insurance company, and wherein an area within the radial chart for the client is compared to statistical data compiled in the database infrastructure for the industry.

7. The method of claim 1, wherein the client information includes information archived in the servers of the client relative to aggregated or individual loss events experienced by the client within a finite preceding period.

8. The method of claim 1, wherein the step of analyzing the client information includes assigning a maturity rating for each of the plurality of event categories of operational risk loss, the maturity rating being one of basic, average, and industry leading.

9. The method of claim 1, further including the step of calculating an expected loss ratio of the client based on the client information using software applications being executed on the servers of the insurance company.

10. The method of claim 1, further including the step of calculating a value of capital relief, which represents a capital retained by the client to offset identified operational risks, by analysis of the client information using statistical and scenario analysis software operating in the servers of the insurance company.