System and method for replacing a liability with insurance and for analyzing data and generating documents pertaining to a premium financing mechanism paying for such insurance

• US 6,026,364 A
• Filed: 07/28/1997
• Issued: 02/15/2000
• Est. Priority Date: 07/28/1997
• Status: Expired due to Fees

• Current Assignee: Whitworth, Brian L.
• Original Assignee: Whitworth, Brian L.
• Inventors: Whitworth, Brian L.
• Primary Examiner(s): Voeltz, Emanuel Todd
• Assistant Examiner(s): Hayes, John W.
• Application Number:
  US08/901,749
• Time in Patent Office: 932 Days
• Field of Search: 705/4, 705/1, 705/36, 705/35, 705/400
• US Class Current: 705/36.00R
• CPC Class Codes: G06Q 30/0283 Price estimation or determination
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

A system and method for replacing a self insurance with insurance, employing a premium financing mechanism with a payout pattern determined in consideration of an estimated payout of the self insurance to pay for the insurance, identifying employers for whom leaving self insurance may be desirable, and, in one preferred embodiment, analyzing data and generating documents and/or computer-readable data files pertaining to such a premium financing mechanism.

Claims

1. A system for analyzing data and generating documents pertaining to a premium financing mechanism, the system comprising:

a computer executable program or programs adapted to;

access estimate data of a cost of self insurance, a cost of insurance, and savings realized by replacing self insurance with insurance;

access risk data pertaining to a transaction wherein a bond is employed to pay for said insurance to replace said self insurance;

process said estimate data to provide data usable by a printer to generate a document pertaining to a bond proposed to pay for said insurance; and

process said risk data to provide data usable by a printer to generate documents pertaining to an issuance of said bond.

2. A method for analyzing data and generating documents pertaining to a premium financing mechanism employing a computer, a video monitor, a printer, and at least one user input mechanism, the method comprising the steps of:

employing the computer to access estimate data of a cost of a liability, a cost of insurance, and savings realized by replacing said liability with insurance; and

prompting the computer with the user input mechanism to process said estimate data to generate with the printer a document pertaining to a premium financing mechanism proposed to pay for said insurance.

3. The method for analyzing data and generating documents retaining to a premium financing mechanism of claim 2 wherein:

said liability is self insurance; and

said estimate data of a cost of a liability comprises estimate data of a cost of self insurance.

4. The method for analyzing data and generating documents pertaining to a premium financing mechanism of claim 3 wherein:

said estimate data of a cost of self insurance is determined from;

estimates of ultimate losses, for at least one past year;

estimates of ultimate losses for at least one upcoming year; and

an estimate of a portion of ultimate losses that will be paid in a budget year.

5. The method for analyzing data and generating documents pertaining to a premium financing mechanism of claim 3 wherein:

said estimate data of a cost of self insurance is determined from data contained within a self insurer'"'"'s report.

6. The method for analyzing data and generating documents pertaining to a premium financing mechanism of claim 3 wherein:

said estimate data of a cost of self insurance is determined from estimates of costs and cash flows calculated from loss, exposure and expense data of a self insured entity and industry loss rates and payout patterns.

7. The method for analyzing data and generating documents pertaining to a premium financing mechanism of claim 3 wherein:

said estimate data of a cost of self insurance is determined from ultimate losses and cash flows by budget year.

8. The method for analyzing data and generating documents pertaining to a premium financing mechanism of claim 7 wherein:

said ultimate losses are forecast from incurred loss and paid loss development methods.

9. The method for analyzing data and generating documents pertaining to a premium financing mechanism of claim 2 wherein:

said estimate data of a cost of insurance is determined from data from a database of recent deals.

10. The method for analyzing data and generating documents pertaining to a premium financing mechanism of claim 9 wherein:

said data from a database of recent deals includes data from insurance quotes.

11. The method for analyzing data and generating documents pertaining to a premium financing mechanism of claim 10 wherein:

said data from insurance quotes includes at least one of;

type of coverage data;

premium data;

date of quote data;

carrier data;

states of operation of employers data;

size of employers data;

industry SIC code; and

private, not for profit, or public sector status of employers data.

12. The method for analyzing data and generating documents pertaining to a premium financing mechanism of claim 9 wherein:

said data from a database of recent deals includes data from a survey of carriers or employers.

13. The method for analyzing data and generating documents pertaining to a premium financing mechanism of claim 2 wherein:

said estimate data of a cost of insurance is determined from data from an audit of an employer'"'"'s claims.

14. The method for analyzing data and generating documents pertaining to a premium financing mechanism of claim 2 wherein:

said estimate data of a cost of insurance is determined from data from a preliminary evaluation questionnaire.

15. The method for analyzing date and generating documents pertaining to a premium financing mechanism of claim 2 wherein:

said estimate data of savings comprises a simulation of sensitivities of savings estimates and premium estimates to changes in a plurality of risk factors.

16. The method for analyzing data and generating documents pertaining to a premium financing mechanism of claim 15 wherein:

said simulation provides an indication of a range of possible savings.

17. The method for analyzing data and generating documents pertaining to a premium financing mechanism of claim 15 wherein:

said simulation provides an indication of a range of possible premiums.

18. The method for analyzing data and generating documents pertaining to a premium financing mechanism of claim 15 wherein:

said simulation provides an indication of a likelihood of obtaining a particular premium.

19. The method for analyzing data and generating documents pertaining to a premium financing mechanism of claim 15 wherein:

said simulation provides an indication of a likelihood of obtaining a particular amount of savings.

20. The method for analyzing date and generating documents pertaining to a premium financing mechanism of claim 2 wherein:

said premium financing mechanism comprises a bond.

21. The method for analyzing data and generating documents pertaining to a premium financing mechanism of claim 2 wherein:

said premium financing mechanism comprises a municipal bond.

22. The method for analyzing data and generating documents pertaining to a premium financing mechanism of claim 2 wherein:

said premium financing mechanism comprises a tax-free municipal bond.

23. The method for analyzing data and generating documents pertaining to a premium financing mechanism of claim 22 wherein:

said liability is self insurance.

24. A system for analyzing data and generating documents pertaining to a premium financing mechanism, the system comprising:

a computer executable program adapted to;

access and process risk data pertaining to a transaction wherein a premium financing mechanism is employed to pay for insurance to replace self insurance; and

process said risk data to generate a data file usable by a printer to generate documents pertaining to said premium financing mechanism.

25. The system for analyzing data and generating documents pertaining to a premium financing mechanism of claim 24 wherein:

said risk data comprises a plurality of risk factors.

26. The system for analyzing data and generating documents pertaining to a premium financing mechanism of claim 25 wherein:

said plurality of risk factors include variations in a number of claims occurring under self insurance.

27. The system for analyzing data and generating documents pertaining to a premium financing mechanism of claim 25 wherein:

said plurality of risk factors include variations in a number of years to close all claims under self insurance.

28. The system for analyzing data and generating documents pertaining to a premium financing mechanism of claim 25 wherein:

said plurality of risk factors include variations in portions of claims handled under managed care.

29. The system for analyzing data and generating documents pertaining to a premium financing mechanism of claim 25 wherein:

said plurality of risk factors include variations in a denial rate for suspected fraudulent claims.

30. The system for analyzing data and generating documents pertaining to a premium financing mechanism of claim 25 wherein:

said plurality of risk factors include variations in a number of catastrophes occurring during a predetermined period of time.

31. The system for analyzing data and generating documents pertaining to a premium financing mechanism of claim 25 wherein:

said plurality of risk factors include variations in interest rates on said premium financing mechanism.

32. The system for analyzing data and generating documents pertaining to a premium financing mechanism of claim 25 wherein:

said plurality of risk factors include variations in portions of claims litigated under said self insurance.

33. The system for analyzing data and generating documents pertaining to a premium financing mechanism of claim 25 wherein:

said plurality of risk factors include variations in cost of internal administration.

34. The system for analyzing data and generating documents pertaining to a premium financing mechanism of claim 24 wherein:

said premium financing mechanism comprises a bond.

35. The system for analyzing data and generating documents pertaining to a premium financing mechanism of claim 24 wherein:

said premium financing mechanism comprises a municipal bond.

36. The system for analyzing data and generating documents pertaining to a premium financing mechanism of claim 24 wherein:

said premium financing mechanism comprises a tax-free municipal bond.

37. A system for analyzing data and generating documents pertaining to a premium financing mechanism, the system comprising:

a computer executable program adapted to;

access risk data pertaining to a transaction wherein a premium financing mechanism is employed to pay for insurance to replace self insurance; and

process said risk data to generate a computer-readable data file pertaining to documents for said premium financing mechanism.

38. A method for replacing self insurance with insurance employing a premium financing mechanism, the method comprising the step of:

making a payment on a premium financing mechanism created pursuant to a transaction where self insurance was replaced with insurance, with said insurance being paid for by said premium financing mechanism, said payment being part of a payout pattern determined in consideration of an estimated payout of claims costs and/or expenses.

39. The method for replacing self insurance with insurance employing a premium financing mechanism of claim 38, wherein:

said premium financing mechanism comprises an initial bond issued pursuant to a transaction where an employer left self insurance for insurance and paid for said insurance with said bond;

the method further comprising the step of;

issuing a subsequent bond to pay for a subsequent insurance policy related to said insurance.

40. The method for replacing self insurance with insurance employing a premium financing mechanism of claim 38 wherein:

said premium financing mechanism comprises a bond.

41. The method for replacing self insurance with insurance employing a premium financing mechanism of claim 38 wherein:

said premium financing mechanism comprises internal carrier premium financing.

42. The method for replacing self insurance with insurance employing a premium financing mechanism of claim 38 wherein:

said premium financing mechanism comprises a bank loan.

43. The method for replacing self insurance with insurance employing a premium financing mechanism of claim 38 wherein:

said premium financing mechanism comprises third party premium financing.

44. The method for replacing self insurance with insurance employing a premium financing mechanism of claim 38 wherein:

said payout pattern comprises an upfront savings payout pattern.

45. The method for replacing self insurance with insurance employing a premium financing mechanism of claim 44 wherein:

said upfront savings payout pattern is determined by, starting with a last payment of said upfront savings payout pattern, sequentially calculating payments of said upfront savings payout pattern until a net present value of said upfront savings payout pattern equals a desired principal of said premium financing mechanism.

46. The method for replacing self insurance with insurance employing a premium financing mechanism of claim 38 wherein:

said payout pattern comprises a fixed amount of savings payout pattern.

47. The method for replacing self insurance with insurance employing a premium financing mechanism of claim 38 wherein:

said premium financing mechanism has a fixed percentage savings payout pattern.

48. The method for replacing self insurance with insurance employing a premium financing mechanism of claim 47 wherein:

payments of said fixed percentage savings payout pattern are determined by setting said payments at a constant percentage of estimated costs of said self insurance.

49. The method for replacing self insurance with insurance employing a premium financing mechanism of claim 38 wherein:

said estimated payout of claims costs and/or expenses comprises an estimated payout of self insurance.

50. The method for replacing self insurance with insurance employing a premium financing mechanism of claim 38 wherein:

said estimated payout of claims costs and/or expenses comprises an estimated payout of insured claims and/or expenses.

51. The method for replacing sele insurance with insurance employing a premium financing mechanism of claim 38 wherein:

said estimated payout of claims costs and/or expenses comprises an estimated industry average payout.

52. A method for replacing self insurance with insurance employing a premium financing mechanism, the method comprising the steps of:

employing a computer to create documentation of costs and savings associated with a change from self insurance to insurance when said insurance is paid for by a premium financing mechanism;

providing said documentation to an outside party or a regulatory body to obtain an approval for said premium financing mechanism; and

paying a premium of said insurance with said premium financing mechanism.

53. A method for replacing self insurance with insurance employing a premium financing mechanism, the method comprising the steps of:

employing a computer to create documentation of costs and savings associated with a subsequent insurance policy issued subsequent to and relating to a transaction where self insurance was initially replaced with insurance, with said subsequent insurance policy being paid for by a premium financing mechanism;

providing said documentation to an outside party or a regulatory body to obtain an approval for said premium financing mechanism; and

paying a premium of said subsequent insurance policy with said premium financing mechanism.

54. A method for replacing self insurance with insurance employing a premium financing mechanism, the method comprising the step of:

issuing a bond created pursuant to a transaction where self insurance was replaced with insurance said for by said bond;

wherein payments of said bond are part of a payout pattern determined in consideration of an estimated payout of claims costs and expenses.

55. A method for replacing self insurance with insurance employing a premium financing mechanism in accordance with claim 54, further comprising the step of producing regulatory filings required to issue a bond created pursuant to a transaction where self insurance is replaced with insurance paid for by said bond.

56. The method for replacing self insurance with insurance employing a premium financing mechanism of claim 54 further comprising the step of:

issuing a subsequent bond to pay for a subsequent insurance policy related to said insurance.

57. The method for replacing self insurance with insurance employing a premium financing mechanism of claim 54 wherein:

said estimated payout of claims costs and expenses comprises an estimated payout of self insurance.

58. The method for replacing self insurance with insurance employing a premium financing mechanism of claim 54 wherein:

said estimated payout of claims costs and expenses comprises an estimated payout of insurance.

59. The method for replacing self insurance with insurance employing a premium financing mechanism of claim 54 wherein:

said estimated payout of claims costs and expenses comprises an estimated industry average payout.

60. The method for replacing self insurance with insurance employing a premium financing mechanism of claim 54 wherein:

said insurance comprises casualty insurance.

61. A method for finding employers for whom leaving self insurance may be desirable, the method comprising the steps of:

determining whether a state allows a transaction where private carriers insure a particular type of employer for a particular type of risk;

determining whether a particular premium financing mechanism is allowed in said state for said particular type of employer for said particular type of risk; and

estimating savings of a plurality of employers for whom said transaction is allowed based on a size, an industry, and a state of each said employer.

62. The method for finding employers for whom leaving self insurance may be desirable of claim 61, the method further comprising the step of:

contacting selected employers of said plurality of employers when a change from self insurance to insurance is expected to result in savings for said selected employers.

63. A method for determining whether investigating leaving self insurance may be desirable, the method comprising the steps of:

determining whether a state allows private carriers to insure a particular type of employer operating within said state for a particular type of risk in said state;

determining whether a particular premium financing mechanism is allowed in said state for said particular type of employer for said particular type of risk;

obtaining loss, exposure, and expense data on a particular employer and on a self insurance program of said particular employer; and

comparing said loss, exposure, and expense data on said particular employer with loss, exposure, and expense data on other employers of said particular type.