Systems and methods for optimizing property risk ratings

• US 7,769,608 B1
• Filed: 01/25/2005
• Issued: 08/03/2010
• Est. Priority Date: 05/27/2004
• Status: Active Grant

• Current Assignee: Allstate Insurance Company (Allstate Corporation)
• Original Assignee: Allstate Insurance Company (Allstate Corporation)
• Inventors: Brinkmann, Margaret A., Peck, Rosemary C., Woll, Richard G.
• Primary Examiner(s): Kyle; Charles R
• Assistant Examiner(s): WEIS, SAMUEL
• Application Number:
  US11/041,469
• Time in Patent Office: 2,016 Days
• Field of Search: 705/4
• US Class Current: 705/4
• CPC Class Codes: G06Q 40/08 Insurance
• CPC Class Codes: G06Q 50/16 Real estate

Abstract

Systems and methods provide optimized property risk ratings and, more particularly, optimized property risk ratings defined by evaluating ratings on a by peril basis. Systems and methods also price insurance products and underwrite insurance products using risk data that has been optimized on a by peril basis. A territory is subdivided into a plurality of regions determined in accordance with at least one predetermined factor. Loss costs representing historic costs for various insured perils are retrieved from a computerized database using a data processor. The loss costs are sorted on a per-peril basis for each of the regions using the data processor. Peril zones are created for each peril that represent related regions in which loss costs for a particular peril are roughly equivalent.

Claims

1. A method for establishing insurance premiums by forming peril zones for property risk ratings, the method comprising:

subdividing a territory into a plurality of regions determined in accordance with at least one predetermined factor;

retrieving loss costs for the territory from at least one computerized database using a data processor, the loss costs representing historic costs for a plurality of insured perils;

sorting the loss costs on a per-peril basis for the regions using the data processor;

creating a plurality of peril zones for the plurality of insured perils using the data processor, each peril zone including a set of regions in which the loss costs for the insured peril are roughly equivalent;

combining the plurality of peril zones for the plurality of insured perils to create a plurality of all-peril zones, each of the all-peril zones being an overlapping intersection of one peril zone from each of the plurality of insured perils; and

setting insurance premiums for the plurality of all-peril zones.

2. The method according to claim 1, further comprising:

receiving payments from policyholders based on the insurance premiums set for the plurality of all-peril zones.

3. The method according to claim 1, wherein subdividing includes using zip codes to denote the regions.

4. The method according to claim 1, wherein the perils are categorized according to fire, water damage, and a category that includes other perils.

5. The method according to claim 1, wherein the at least one predetermined factor is based upon a geographic characteristic of the territory.

6. The method according to claim 5, wherein the geographic characteristic of the territory is a zip code boundary.

7. A system for forming peril zones to provide property risk ratings for setting insurance premiums, the system comprising:

a processor;

a database that stores loss costs representing historic costs for the territory for a plurality of insured perils;

a memory including software loaded thereon, the software implementing a program for;

subdividing a territory into a plurality of regions determined in accordance with at least one predetermined factor;

accessing the database to retrieve, for the territory, the loss costs representing historic costs for the plurality of insured perils;

sorting the loss costs on a per-peril basis for the regions;

creating a plurality of peril zones for the plurality of insured perils, each peril zone including a set of regions in which the loss costs for the insured peril are roughly equivalent;

combining the created plurality of peril zones for the plurality of insured perils to create a plurality of all-peril zones, each of the all-peril zones being an overlapping intersection of one peril zone from each of the plurality of insured perils; and

setting insurance premiums for the plurality of all-peril zones.

8. The system according to claim 7, wherein sorting the loss costs includes classifying regions by zip code.

9. The system according to claim 7, wherein the peril zones are categorized according to fire, water damage, and a category that includes other perils.

10. A computer readable storage medium having stored thereon instructions executable by a computer for a method of forming peril zones to provide property risk ratings, the method comprising:

subdividing a territory into a plurality of regions determined in accordance with at least one predetermined factor;

retrieving, by the computer, loss costs for the territory from at least one computerized database, the loss costs representing historic costs for a plurality of insured perils;

sorting, by the computer, the loss costs on a per-peril basis for the regions;

creating, by the computer, a plurality of peril zones for the plurality of insured perils, each peril zone including a set of regions in which the loss costs for the insured peril are roughly equivalent;

combining, by the computer, the created plurality of peril zones for the plurality of insured perils to create a plurality of all-peril zones, each of the all-peril zones being an overlapping intersection of one peril zone from each of the plurality of insured perils; and

setting, by the computer, insurance premiums for the plurality of all-peril zones.

11. The computer readable storage medium according to claim 10, wherein the method further comprises:

receiving payments from policyholders based on the insurance premiums set for the plurality of all-peril zones.

12. The computer readable storage medium of claim 10, wherein the regions represent zip codes.

13. The computer readable storage medium of claim 10, wherein the perils are categorized according to fire, water damage, and a category including other perils.

14. The computer readable storage medium of claim 10, wherein the at least one predetermined factor is based upon a geographic characteristic of the territory.

15. The computer readable storage medium of claim 14, wherein the geographic characteristic of the territory is a zip code boundary.