On-line reinsurance capacity auction system and method

• US 20020046067A1
• Filed: 10/01/2001
• Published: 04/18/2002
• Est. Priority Date: 10/02/2000
• Status: Active Grant

• Current Assignee: Swiss Reinsurance Company
• Original Assignee: Swiss Reinsurance Company
• Inventors: Mumenthaler, Christian, Kraehenbuehl, Martin, Walter, Ralph
• Granted Patent: US 7,840,473 B2
• Time in Patent Office: Days
• US Class Current: 705/4
• CPC Class Codes: G06Q 30/08 Auctions
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/08 Insurance

Abstract

A system and method of selling reinsurance includes identifying a reinsurance product and a capacity of the reinsurance product to be sold and calculating a fair risk price for the reinsurance product. The reinsurance product is then offered to potential buyers via an electronic auction, wherein a minimum bid in the electronic auction is determined, at least in part, by the fair risk price. Bids are received from the buyers for portions of the capacity of the reinsurance product and are ranked in accordance with a calculated profitability value and/or time of receipt. Buyers are notified of a status of their respective bids, and particularly, whether bids have been tentatively accepted, partially accepted, or excluded, i.e., rejected. Upon notification of bid status, buyers are given the opportunity to modify bid parameters in an attempt to have their bids ranked at higher a level, thereby increasing the chance of the bid being accepted.

Claims

1. A method of selling reinsurance, comprising the steps of:

identifying a reinsurance product;

determining a capacity of the reinsurance product to be sold;

offering the reinsurance product for sale through an auction;

accepting bids for at least a portion of the capacity; and

consummating a contract for the sale of at least a portion of the reinsurance product to holders of winning bids.

2. The method of claim 1, wherein the reinsurance product is at least one of earthquake reinsurance, windstorm reinsurance and marine catastrophe reinsurance.

3. The method of claim 1, wherein the auction comprises an on-line auction.

4. The method of claim 3, wherein the auction employs the Internet.

5. The method of claim 3, wherein the auction is presented via a browser.

6. The method of claim 1, further comprising accepting bids from at least one of direct insurers and brokers.

7. The method of claim 1, wherein bids comprise at least a bid amount and an indication of the amount of desired capacity.

8. The method of claim 1, wherein the step of accepting bids comprises ranking the bids.

9. The method of claim 8, wherein the step of ranking comprises calculating a profitability value.

10. The method of claim 8, further comprising changing a status of at least one bid.

11. The method of claim 10, wherein the status is one of OK, Partial OK and Excluded.

12. The method of claim 1, wherein at least one of the bids is ranked according to a time it is received.

14. The method of claim 13, wherein the electronic network comprises the Internet.

15. The method of claim 13, further comprising ranking the at least one bid with respect to other bids.

16. The method of claim 15, wherein the ranking is based, at least in part, on the profitability value.

17. The method of claim 16, wherein the ranking is based, at least in part, on a time at which the at least one bid is received.

18. The method of claim 13, wherein the profitability value is based, at least in part, on a requested inception date.

19. The method of claim 13, wherein the step of indicating to the bidder comprises indicating whether the at least one bid has a status of one of OK, Partial OK and Excluded.

20. The method of claim 13, further comprising generating an auction ranking element for the at least one bid.

21. The method of claim 13, wherein communication via the electronic network is secure.

22. The method of claim 13, further comprising receiving a modified bid in response to the step of indicating whether the at least one bid is accepted.

23. The method of claim 22, further comprising modifying a parameter of the at least one bid other than a bid price.

24. The method of claim 13, further comprising calculating a minimum acceptable bid.

26. The method of claim 25, wherein the reinsurance product comprises at least one of earthquake reinsurance, windstorm reinsurance and marine catastrophe reinsurance.

27. The method of claim 25, wherein the fair risk price is calculated based on historical data.

28. The method of claim 25, wherein the electronic auction is offered via the Internet.

29. The method of claim 28, wherein the electronic auction is offered via a web browser.

30. The method of claim 25, wherein the buyers comprise at least one of direct insurers and insurance brokers.

31. The method of claim 25, wherein bids comprise a plurality of parameters.

32. The method of claim 31, wherein the parameters comprise at least one of price, inception date and a deductible.

33. The method of claim 25, further comprising generating an auction ranking element.

34. The method of claim 33, wherein the auction ranking element comprising a profitability value.

35. The method of claim 25, further comprising calculating a profitability value.

36. The method of claim 25, wherein the status of a bid comprises one of OK, Partial OK and Excluded.

37. The method of claim 36, further comprising changing the status of a first bid from OK to one of Partial OK and Excluded, based on a ranking of a second bid.

38. The method of claim 25, further comprising consummating a reinsurance contract between an operator of the electronic auction and a buyer having a winning bid.

40. The method of claim 39, wherein the particular reinsurance product comprises at least one of earthquake reinsurance, windstorm reinsurance and marine catastrophe reinsurance.

41. The method of claim 39, wherein the bid parameters further comprise a deductible amount and an inception date.

42. The method of claim 39, further comprising changing a status of a submitted bid to a draft bid.

43. The method of claim 39, further comprising changing the bid parameters in view of the status of the bid.

44. The method of claim 39, wherein the electronic auction for the particular reinsurance product is active for a predetermined period of time.

45. The method of claim 39, wherein direct insurers perform the steps of claim 39.

47. The system of claim 46, wherein the reinsurance product is at least on of earthquake reinsurance, windstorm reinsurance and marine catastrophe reinsurance.

48. The system of claim 46, wherein the auction ranking element engine ranks bids based, at least in part, on a profitability value.

49. The system of claim 46, wherein direct insurers submit bids to the web server.

50. The system of claim 46, wherein a submitted bid comprises a bid amount and a desired coverage amount.

51. The system of claim 50, wherein the auction ranking element engine determines whether the sufficient capacity remains to satisfy the desired coverage amount.

52. The system of claim 46, wherein the system is operated by or on behalf of a reinsurance company.

53. The system of claim 46, wherein the direct insurers participate as bidders for the reinsurance product.

13. A method of offering a reinsurance product, comprising the steps of:

offering a predetermined capacity in the reinsurance product over an electronic network;

receiving, from a bidder, at least one bid for at least a portion of the capacity;

determining whether a profitability value of the at least one bid is acceptable; and

indicating to the bidder whether the at least one bid is accepted.

25. A method of selling reinsurance, comprising the steps of:

identifying a reinsurance product and a capacity of the reinsurance product to be sold;

calculating a fair risk price for the reinsurance product;

offering the reinsurance product to buyers via an electronic auction, wherein a minimum bid in the electronic auction is determined, at least in part, by the fair risk price;

receiving bids from the buyers for portions of the capacity of the reinsurance product;

ranking the bids;

notifying the buyers of a status of their respective bids; and

ending the electronic auction after a predetermined period of time.

39. A method of purchasing reinsurance, comprising the steps of:

accessing an electronic auction;

selecting an auction for a particular reinsurance product;

drafting a bid for the reinsurance product by entering bid parameters including a bid price and a coverage amount;

submitting the bid electronically;

receiving an indication of a status of the bid; and

consummating a contract for the reinsurance product;

46. A system for selling a reinsurance product, comprising:

a fair risk price calculator;

an auction and auction participant database;

an auction ranking element engine; and

a web server in communication with the Internet,

wherein the fair risk price calculator provides information for calculating a minimum bid, the database stores information related to at least one auction for at least one reinsurance product, and the auction ranking element engine is operable to rank bids submitted to the database via the web server.

54. A method of selling a product, comprising the steps of:

(a) identifying the product;

(b) determining a capacity of the product to be sold

(c) offering the product for sale through auction

(d) accepting bids for at least a portion of the capacity; and

(e) consummating a contract for the sale of at least a portion of the product to holders of winning bids.

55. The method of claim 54, wherein the product is a reinsurance product.

56. The method of claim 54, wherein the product is a risk shifting product.