Premium transition factor

• US 7,827,046 B2
• Filed: 02/16/2006
• Issued: 11/02/2010
• Est. Priority Date: 11/22/2005
• Status: Expired due to Fees

• Current Assignee: Plymouth Rock Assurance Corp. (Investment Portfolio) (Plymouth Rock Company Incorporated)
• Original Assignee: Plymouth Rock Assurance Corp. (Investment Portfolio) (Plymouth Rock Company Incorporated)
• Inventors: Conner, William J. III, Leibensperger, Marlowe G., Arnold, Geoffrey H.
• Primary Examiner(s): Kalinowski; Alexander
• Assistant Examiner(s): Ebersman; Bruce I
• Application Number:
  US11/355,781
• Publication Number:
  US 20070118411A1
• Time in Patent Office: 1,720 Days
• Field of Search: 99331-333, 99372-384, 993/85, 99389-392, 99444-450, 219521-525, 219/401, 219/415
• US Class Current: 705/4
• CPC Class Codes: G06Q 40/08 Insurance
• CPC Class Codes: G06Q 50/40 Business processes related to the transportation industry shipping G06Q10/083

Abstract

Auto insurance customers can be transitioned from an initial rating algorithm A to a subsequent algorithm B by phasing in the transition over a period of several years. The premium charged during the transition period is equal to the premium calculated under the rating algorithm B minus a premium adjustment. The premium adjustment is given by the difference between the premium according to algorithm B minus the legacy premium from algorithm A, said difference being multiplied by a rating transition factor. The rating transition factor may be a linearly decreasing function which has a value of 1 just before the transition period and a value of zero at the end of the transition period. The transition period may be in the range of 3 to 8 years long.

Claims

1. A computer implemented method for transitioning a block of insureds from a first rating algorithm A to a second rating algorithm B, said block of insureds comprising one or more insured drivers, said method comprising:

a) receiving by said computer a length of transition period n_o;

b) calculating by said computer a premium for each one of said insured drivers, said premium being for a given term n during said transition period wherein said premium is greater than or equal to the premium Pt_n , given by the equation;

Pt_n=Pb_n−

Tf_n*(Pb_n−

Pa_o)

 

wherein;

i. Pb_n is the premium for term n of the transition period calculated by said algorithm B;

ii. Tf_n is a transition factor for term n; and

iii. Pa_o is the premium for term 0 of said transition period calculated by said algorithm A; and

c) outputting said premium to an insurance agent offering said insurance to said insured driver

wherein Tf_n is chosen such that the change in said premium Pt_n from the prior premium Pt_(n-1) is a normal change in premium for the majority of said insured drivers and wherein said transition factor Tf_n is given by the equation;

2. The method of claim 1 wherein said normal change in premium is less than 20% in magnitude.

3. The method of claim 1 wherein W is greater than or equal to 1.0 if Pb_n is greater than Pa_o and W is less than or equal to 1.0 if Pb_n is less than or equal to Pa_o.