COMMERCIAL INSURANCE SCORING SYSTEM AND METHOD
First Claim
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1. A method for predicting the profitability of a commercial insurance policy, said method comprising:
- obtaining policyholder data including historical premium and loss data;
obtaining external data;
identifying one or more variables in at least one of the policyholder and external data,creating by a computer one or more derived variables from at least one of said policyholder data, external data and any identified variables;
evaluating by the computer, the identified variables and at least one of the derived variables against the policyholder data;
identifying a set of variables predictive of the insurance policy'"'"'s profitability based on the evaluation of at least one of the identified variables and the derived variables against the policyholder data; and
creating an individually weighted multivariate statistical model based on said set of predictive variables, and an associated score, wherein said score is expressed as a sum of products, each of said products being a coefficient multiplied by a variable taken to a power, said coefficients generated mathematically by operating on said set of predictive variables, andusing said score to predict the profitability of an insurance policy.
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Abstract
A quantitative system and method that employs data sources external to an insurance company to generate a statistical model that may be used to more accurately and consistently predict commercial insurance profitability (the “predictive statistical model”). The system and method are able to predict individual commercial insurance policyholder profitability on a prospective basis regardless of the internal data and business practices of a particular insurance company
13 Citations
13 Claims
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1. A method for predicting the profitability of a commercial insurance policy, said method comprising:
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obtaining policyholder data including historical premium and loss data; obtaining external data; identifying one or more variables in at least one of the policyholder and external data, creating by a computer one or more derived variables from at least one of said policyholder data, external data and any identified variables; evaluating by the computer, the identified variables and at least one of the derived variables against the policyholder data; identifying a set of variables predictive of the insurance policy'"'"'s profitability based on the evaluation of at least one of the identified variables and the derived variables against the policyholder data; and creating an individually weighted multivariate statistical model based on said set of predictive variables, and an associated score, wherein said score is expressed as a sum of products, each of said products being a coefficient multiplied by a variable taken to a power, said coefficients generated mathematically by operating on said set of predictive variables, and using said score to predict the profitability of an insurance policy. - View Dependent Claims (2, 3, 4, 5, 6, 7, 8, 9, 10, 11)
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12. A program storage device readable by a machine, said program storage device tangibly embodying a program of instructions executable by the machine to perform a method comprising:
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obtaining policyholder data including historical premium and loss data; obtaining external data including at least one of business level data, personal data and household demographic data, identifying one or more variables in at least one of the policyholder and external data, creating by a computer one or more derived variables from at least one of said policyholder data, external data and any identified variables; evaluating by the computer, the identified variables and at least one of the derived variables against the policyholder data; identifying a set of variables predictive of the insurance policy'"'"'s profitability based on the evaluation of at least one of the identified variables and the derived variables against the policyholder data; and creating an individually weighted multivariate statistical model based on said set of predictive variables, and an associated score, wherein said score is expressed as a sum of products, each of said products being a coefficient multiplied by a variable taken to a power, said coefficients generated mathematically by operating on said set of predictive variables, and using said score to predict the profitability of an insurance policy. - View Dependent Claims (13)
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Specification