System and method for automated risk-based pricing of a vehicle warranty insurance policy

• US 6,182,048 B1
• Filed: 11/23/1998
• Issued: 01/30/2001
• Est. Priority Date: 11/23/1998
• Status: Expired due to Fees

• Current Assignee: General Electric Company
• Original Assignee: General Electric Company
• Inventors: Hershey, John Erik, Osborn, Brock Estel
• Primary Examiner(s): Trammell, James P.
• Assistant Examiner(s): Rosen, Nicholas D.
• Application Number:
  US09/197,755
• Time in Patent Office: 799 Days
• Field of Search: 705/4, 283/54
• US Class Current: 705/4
• CPC Class Codes: G06Q 40/08 Insurance

Abstract

A system and method for automated risk-based pricing of a vehicle-warranty insurance policy. A vehicle warranty policy request input source receives a request for a vehicle warranty policy. A processor receives the request and uses analytical tools in conjunction with an environmental database, a vehicle database, and a historical database, to service the request. The processor generates a price, conditions and terms for the request using a risk-based pricing algorithm. A system operator reviews the price, conditions and terms and either accepts or rejects the policy request. The system operator also has the option to adjust the price, conditions and terms derived from the processor.

Claims

1. A system for performing risk-based pricing of a vehicle warranty insurance policy, comprising:

a vehicle warranty policy request input source for receiving a request for a vehicle warranty policy;

a historical database containing a plurality of historical vehicle warranty policies;

a plurality of databases each containing vehicle warranty related information;

a processor, coupled to the vehicle warranty policy request input source, the historical database, and the plurality of databases, for servicing the request for a vehicle warranty policy, the processor comprising means for risk-based pricing the request and means for suggesting terms and conditions for the risk-based policy, wherein the risk-based pricing means partitions the vehicle listed in the request into a plurality of components, determines a correlation between failure rates of each of the plurality of components and costs to effect repair of the failed component with the vehicle warranty related information contained in the plurality of databases, derives an expected cost of policy claims from the correlations and sets a policy proffer price covering the expected cost of policy claims plus a predetermined profit margin; and

a vehicle warranty policy output source, coupled to the processor, for outputting the serviced request for a vehicle warranty policy.

2. The system according to claim 1, wherein the vehicle warranty policy request input source comprises an electronic channel connected to the Internet.

3. The system according to claim 1, wherein the vehicle warranty policy request input source comprises an electronic channel connected to a public switched telephone network, wherein the vehicle warranty policy request is handled by a telephone operator.

4. The system according to claim 1, wherein the vehicle warranty policy request input source comprises an electronic channel connected to a voice activated network, wherein a voice synthesizer generates a facsimile of speech guiding a customer to prepare the request and a speech recognition system recognizes aural responses generated from the customer.

5. The system according to claim 1, wherein the vehicle warranty policy request input source comprises an electronic channel connected to a dual tone multi-frequency telephone network, wherein a voice synthesizer generates a facsimile of speech guiding a customer to prepare the request and a recognition system recognizes responses entered by a customer through key buttons on a dual tone multi-frequency telephone.

6. The system according to claim 1, wherein the plurality of databases comprise an environmental database containing a plurality of environmental information for geographic regions and a vehicle database containing vehicle related information.

7. The system according to claim 1, wherein the plurality of databases comprise a plurality of analytical tools.

8. The system according to claim 1, wherein the vehicle warranty related information comprises a plurality of environmental variables of a region within which the vehicle is likely to be operated over a term of the policy, make, model and year of the vehicle and the mileage of the vehicle at the time of starting the policy.

9. The system according to claim 1, wherein the pricing means searches the historical database for historical vehicle warranty policies that are substantially similar to the policy request and compares the derived expected cost of the policy request to the actual incurred costs set forth in the historical vehicle warranty policies.

10. The system according to claim 9, wherein the pricing means adjusts the derived expected cost of the policy request to conform to the actual incurred costs set forth in the historical vehicle warranty policies.

11. The system according to claim 1, wherein the vehicle warranty policy output source comprises a system operator input/output enabling a system operator to review the price, terms and conditions of the serviced policy request.

12. The system according to claim 11, wherein the system operator input/output comprises means for accepting or rejecting the price, terms and conditions of the serviced policy request and means for manually entering a modified price, terms and conditions for the policy request.

13. The system according to claim 12, wherein the vehicle warranty policy output source further comprises means for communicating to the customer of the vehicle warranty policy request whether the request has been accepted and the price, terms and conditions of the policy or whether the request has been rejected.

14. The system according to claim 1, wherein the vehicle warranty policy output source comprises an electronic channel connected to the Internet.

15. The system according to claim 1, wherein the vehicle warranty policy output source comprises an electronic channel connected to a public switched telephone network, wherein the serviced request is communicated to a customer by a telephone operator.

16. The system according to claim 1, wherein the vehicle warranty policy output source comprises an electronic channel connected to a voice activated network, wherein a voice synthesizer generates a facsimile of speech communicating the results of the serviced request to a customer.

17. A method for performing risk-based pricing of a vehicle warranty insurance policy, comprising:

receiving a request for a vehicle warranty policy;

storing a plurality of historical vehicle warranty policies;

storing a plurality of vehicle warranty related information;

risk-based pricing the vehicle warranty policy request, wherein the risk-based pricing comprises partitioning the vehicle listed in the request into a plurality of components, determining a correlation between failure rates of each of the plurality of components and costs to effect repair of the failed component with the stored vehicle warranty related information, deriving an expected cost of policy claims from the correlations and setting a policy proffer price covering the expected cost of policy claims plus a predetermined profit margin;

suggesting terms and conditions for the risk-based priced policy; and

outputting the price and the suggested terms and conditions for the vehicle warranty policy request.

18. The method according to claim 17, wherein receiving a request for a vehicle warranty policy comprises using an electronic channel connected to the Internet.

19. The method according to claim 17, wherein receiving a request for a vehicle warranty policy comprises using an electronic channel connected to a public switched telephone network, wherein the vehicle warranty policy request is handled by a telephone operator.

20. The method according to claim 17, wherein receiving a request for a vehicle warranty policy comprises using an electronic channel connected to a voice activated network, wherein a voice synthesizer generates a facsimile of speech guiding a customer to prepare the request and a speech recognition system recognizes aural responses generated from the customer.

21. The method according to claim 17, wherein receiving a request for a vehicle warranty policy comprises using an electronic channel connected to a dual tone multi-frequency telephone network, wherein a voice synthesizer generates a facsimile of speech guiding a customer to prepare the request and a recognition system recognizes responses entered by a customer through key buttons on a dual tone multi-frequency telephone.

22. The method according to claim 17, wherein the stored plurality of vehicle warranty related information comprises a plurality of environmental information for geographic regions and a plurality of vehicle related information.

23. The method according to claim 17, further comprising storing a plurality of analytical tools.

24. The method according to claim 17, wherein the vehicle warranty related information comprises a plurality of environmental variables of a region within which the vehicle is likely to be operated over a term of the policy, make, model and year of the vehicle and the mileage of the vehicle at the time of starting the policy.

25. The method according to claim 17, wherein risk-based pricing the vehicle warranty policy request further comprises searching the stored historical vehicle warranty policies to find policies that are substantially similar to the policy request and comparing the derived expected cost of the policy request to the actual incurred costs set forth in the historical vehicle warranty policies.

26. The method according to claim 25, wherein risk-based pricing the vehicle warranty policy request further comprises adjusting the derived expected cost of the policy request to conform to the actual incurred costs set forth in the historical vehicle warranty policies.

27. The method according to claim 17, wherein the outputting comprises sending the price and the suggested terms and conditions for the vehicle warranty policy request to a system operator for review.

28. The method according to claim 27, further comprising enabling the system operator to accept or reject the price, terms and conditions of the serviced policy request and manually enter a modified price, terms and conditions for the policy request.

29. The method according to claim 28, further comprising communicating to the customer of the vehicle warranty policy request whether the request has been accepted and the price, terms and conditions of the policy or whether the request has been rejected.

30. The method according to claim 17, wherein the outputting comprises using an electronic channel connected to the Internet.

31. The method according to claim 17, wherein the outputting comprises using an electronic channel connected to a public switched telephone network, wherein the serviced request is communicated to a customer by a telephone operator.

32. The method according to claim 17, wherein the outputting comprises using an electronic channel connected to a voice activated network, wherein a voice synthesizer generates a facsimile of speech communicating the results of the serviced request to a customer.

33. A system for performing risk-based pricing of a vehicle warranty insurance policy, comprising:

a vehicle warranty policy request input source for receiving a request for a vehicle warranty policy;

a historical database containing a plurality of historical vehicle warranty policies;

a plurality of databases each containing vehicle warranty related information;

a processor, coupled to the vehicle warranty policy request input source, the historical database, and the plurality of databases, for servicing the request for a vehicle warranty policy, the processor comprising means for risk-based pricing the request and means for suggesting terms and conditions for the risk-based policy, wherein the risk-based pricing means partitions the vehicle listed in the request into a plurality of components and determines a correlation between failure rates of each of the plurality of components and costs to effect repair of the failed component with the vehicle warranty related information contained in the plurality of databases; and

a vehicle warranty policy output source, coupled to the processor, for outputting the serviced request for a vehicle warranty policy.

34. The system according to claim 33, wherein the vehicle warranty policy request input source comprises an electronic channel connected to the Internet.

35. The system according to claim 33, wherein the vehicle warranty policy request input source comprises an electronic channel connected to a public switched telephone network, wherein the vehicle warranty policy request is handled by a telephone operator.

36. The system according to claim 33, wherein the vehicle warranty policy request input source comprises an electronic channel connected to a voice activated network, wherein a voice synthesizer generates a facsimile of speech guiding a customer to prepare the request and a speech recognition system recognizes aural responses generated from the customer.

37. The system according to claim 33, wherein the vehicle warranty policy request input source comprises an electronic channel connected to a dual tone multi-frequency telephone network, wherein a voice synthesizer generates a facsimile of speech guiding a customer to prepare the request and a recognition system recognizes responses entered by a customer through key buttons on a dual tone multi-frequency telephone.

38. The system according to claim 33, wherein the plurality of databases comprise an environmental database containing a plurality of environmental information for geographic regions and a vehicle database containing vehicle related information.

39. The system according to claim 33, wherein the plurality of databases comprise a plurality of analytical tools.

40. The system according to claim 33, wherein the risk-based pricing means derives an expected cost of policy claims from the correlations and sets a policy proffer price covering the expected cost of policy claims plus a predetermined profit margin.

41. The system according to claim 40, wherein the vehicle warranty related information comprises a plurality of environmental variables of a region within which the vehicle is likely to be operated over a term of the policy, make, model and year of the vehicle and the mileage of the vehicle at the time of starting the policy.

42. The system according to claim 40, wherein the risk-based pricing means searches the historical database for historical vehicle warranty policies that are substantially similar to the policy request and compares the derived expected cost of the policy request to the actual incurred costs set forth in the historical vehicle warranty policies.

43. The system according to claim 42, wherein the risk-based pricing means adjusts the derived expected cost of the policy request to conform to the actual incurred costs set forth in the historical vehicle warranty policies.

44. The system according to claim 33, wherein the vehicle warranty policy output source comprises a system operator input/output enabling a system operator to review the price, terms and conditions of the serviced policy request.

45. The system according to claim 44, wherein the system operator input/output comprises means for accepting or rejecting the price, terms and conditions of the serviced policy request and means for manually entering a modified price, terms and conditions for the policy request.

46. The system according to claim 45, wherein the vehicle warranty policy output source further comprises means for communicating to the customer of the vehicle warranty policy request whether the request has been accepted and the price, terms and conditions of the policy or whether the request has been rejected.

47. The system according to claim 33, wherein the vehicle warranty policy output source comprises an electronic channel connected to the Internet.

48. The system according to claim 33, wherein the vehicle warranty policy output source comprises an electronic channel connected to a public switched telephone network, wherein the serviced request is communicated to a customer by a telephone operator.

49. The system according to claim 33, wherein the vehicle warranty policy output source comprises an electronic channel connected to a voice activated network, wherein a voice synthesizer generates a facsimile of speech communicating the results of the serviced request to a customer.

50. A method for performing risk-based pricing of a vehicle warranty insurance policy, comprising:

receiving a request for a vehicle warranty policy;

storing a plurality of historical vehicle warranty policies;

storing a plurality of vehicle warranty related information;

risk-based pricing the vehicle warranty policy request, wherein the risk-based pricing comprises partitioning the vehicle listed in the request into a plurality of components and determining a correlation between failure rates of each of the plurality of components and costs to effect repair of the failed component with the stored vehicle warranty related information;

suggesting terms and conditions for the risk-based priced policy according to the risk-based pricing; and

outputting the price and the suggested terms and conditions for the vehicle warranty policy request.

51. The method according to claim 50, wherein receiving a request for a vehicle warranty policy comprises using an electronic channel connected to the Internet.

52. The method according to claim 50, wherein receiving a request for a vehicle warranty policy comprises using an electronic channel connected to a public switched telephone network, wherein the vehicle warranty policy request is handled by a telephone operator.

53. The method according to claim 50, wherein receiving a request for a vehicle warranty policy comprises using an electronic channel connected to a voice activated network, wherein a voice synthesizer generates a facsimile of speech guiding a customer to prepare the request and a speech recognition system recognizes aural responses generated from the customer.

54. The method according to claim 50, wherein receiving a request for a vehicle warranty policy comprises using an electronic channel connected to a dual tone multi-frequency telephone network, wherein a voice synthesizer generates a facsimile of speech guiding a customer to prepare the request and a recognition system recognizes responses entered by a customer through key buttons on a dual tone multi-frequency telephone.

55. The method according to claim 50, wherein the stored plurality of vehicle warranty related information comprises a plurality of environmental information for geographic regions and a plurality of vehicle related information.

56. The method according to claim 50, further comprising storing a plurality of analytical tools.

57. The method according to claim 50, wherein risk-based pricing the vehicle warranty policy request further comprises deriving an expected cost of policy claims from the correlations and setting a policy proffer price covering the expected cost of policy claims plus a predetermined profit margin.

58. The method according to claim 57, wherein the vehicle warranty related information comprises a plurality of environmental variables of a region within which the vehicle is likely to be operated over a term of the policy, make, model and year of the vehicle and the mileage of the vehicle at the time of starting the policy.

59. The method according to claim 57, wherein risk-based pricing the vehicle warranty policy request further comprises searching the stored historical vehicle warranty policies to find policies that are substantially similar to the policy request and comparing the derived expected cost of the policy request to the actual incurred costs set forth in the historical vehicle warranty policies.

60. The method according to claim 59, wherein risk-based pricing the vehicle warranty policy request further comprises adjusting the derived expected cost of the policy request to conform to the actual incurred costs set forth in the historical vehicle warranty policies.

61. The method according to claim 50, wherein the outputting comprises sending the price and the suggested terms and conditions for the vehicle warranty policy request to a system operator for review.

62. The method according to claim 61, further comprising enabling the system operator to accept or reject the price, terms and conditions of the serviced policy request and manually enter a modified price, terms and conditions for the policy request.

63. The method according to claim 62, further comprising communicating to the customer of the vehicle warranty policy request whether the request has been accepted and the price, terms and conditions of the policy or whether the request has been rejected.

64. The method according to claim 50, wherein the outputting comprises using an electronic channel connected to the Internet.

65. The method according to claim 64, wherein the outputting comprises using an electronic channel connected to a public switched telephone network, wherein the serviced request is communicated to a customer by a telephone operator.

66. The method according to claim 50, wherein the outputting comprises using an electronic channel connected to a voice activated network, wherein a voice synthesizer generates a facsimile of speech communicating the results of the serviced request to a customer.