Return-of-premium insurance system and method

• US 8,271,299 B2
• Filed: 09/10/2004
• Issued: 09/18/2012
• Est. Priority Date: 09/10/2004
• Status: Active Grant

• Current Assignee: DSD Holdings LLC
• Original Assignee: DSD Holdings LLC
• Inventors: Davidson, S. Kenneth
• Primary Examiner(s): Koppikar, Vivek
• Application Number:
  US10/938,326
• Publication Number:
  US 20060059020A1
• Time in Patent Office: 2,930 Days
• Field of Search: 705 2- 4
• US Class Current: 705/4
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/08 Insurance

Abstract

An insurance method comprising a return-of-premium (ROP) benefit is disclosed. The ROP benefit is applied to property and casualty insurance and related insurance forms. The ROP benefit provides a return of all premiums after a set period of insurance, less the amount of any claims made by the insured. The policy may then be rolled over to again provide a ROP benefit to the policyholder. Fractional ROP benefit returns may be made on the policy after a minimum set period less than the full term of the policy. The ROP benefit may be provided by means of a rider to a standard property or casualty policy.

Claims

1. A method for offering a multi-term insurance product with a return-of-premium benefit utilizing a computer, comprising the steps of:

(a) computing with the computer an initial premium amount for an initial policy term for the insurance product, wherein the insurance product comprises one of non-commercial homeowners'"'"' insurance and non-commercial automobile insurance, based upon one of an input value of an insured property or a computerized risk assessment for an insured casualty risk;

(b) computing with the computer a cost for a return-of-premium benefit utilizing a return-of-premium algorithm, wherein said return-of-premium computation receives as input the initial premium amount, a return-of-premium term, and a plurality of return-of-premium fractions, wherein each return-of-premium fraction corresponds to an insured period that is not greater than the return-of-premium term, and wherein the return-of-premium fractions increase exponentially as the corresponding insured period increases;

(c) computing with the computer a total initial premium amount by adding the initial premium amount to the cost for a return-of-premium benefit;

(d) outputting from the computer an initial insurance product offering comprising the total initial premium amount for the initial policy term;

(e) receiving a change in a condition related to the one of an input value of an insured property or a computerized risk assessment for an insured casualty risk;

(f) computing with the computer a subsequent premium amount for a first subsequent policy term;

(g) re-computing with the computer the cost for the return-of-premium benefit utilizing the return-of-premium algorithm, wherein said return-of-premium re-computation receives as input the subsequent premium amount, the return-of-premium term, and the plurality of return-of-premium fractions;

(h) computing with the computer a total subsequent premium amount by adding the subsequent premium amount to the cost for a return-of-premium benefit;

(i) outputting from the computer a revised insurance product offering comprising the total subsequent premium amount for the first subsequent policy term;

(j) during or after the first subsequent policy term, receiving a request to cancel the insurance product;

(k) calculating with the computer the return-of-premium benefit by multiplying the total of all premiums paid during the insured period by the corresponding return of premium fraction, and then subtracting a total amount of all claims paid during the insured period; and

(l) when the calculated return-of-premium benefit is greater than zero, providing the return-of-premium benefit to the insured.

2. The method of claim 1, further comprising the steps of:

(a) computing a revised premium amount in response to a policy change occurring during a revised policy term, wherein the revised term comprises at least one of the initial and subsequent policy terms;

(b) computing the cost for a revised return-of-premium benefit during the revised policy term utilizing the return-of-premium algorithm, wherein said return-of-premium algorithm receives as input the revised premium amount, the return-of-premium term, and the fraction of the return-of-premium term remaining;

(c) computing a revised total premium amount by adding the revised premium amount to the cost for the revised return-of-premium benefit; and

(d) revising at least one of the initial and subsequent insurance product offerings to comprise the revised total premium amount.

3. The method of claim 2, further comprising the step of computing and outputting a revised return-of-premium benefit.

4. The method of claim 3, wherein said step of computing and outputting a revised return-of-premium benefit comprises the steps of:

(a) receiving a request to compute a revised return-of-premium benefit;

(b) calculating a revised return-of-premium benefit by subtracting a total amount of all claims paid from a total of all premiums paid during the revised term.

5. The method of claim 3, wherein said step of computing and outputting a revised return-of-premium benefit comprises the steps of:

(a) receiving a request to compute a revised return-of-premium benefit during the revised term; and

(b) calculating a revised return-of-premium benefit by subtracting a total amount of all claims paid from the product of a total of all premiums paid during the revised term multiplied by the return-of-premium fraction corresponding to the insured period.

6. The method of claim 1, further comprising the step of receiving a request for a return-of-premium benefit after the initial term, and wherein the return-of-premium benefit is added to a subsequent premium amount rather than to the initial premium amount to calculate with the computer a total subsequent premium amount.

7. The method of claim 1, further comprising the step of receiving a request for a second return-of-premium benefit after the initial term and after the expiration of the return-of-premium benefit term.

8. The method of claim 7, further comprising the step of computing with the computer a cost for the second return-of-premium benefit utilizing the return-of-premium algorithm, wherein the return-of-premium computation receives as input a subsequent premium amount, a second return-of-premium term, and a second plurality of return-of-premium fractions, wherein each of the second plurality of return-of-premium fractions corresponds to a multi-term insured period that is less than the second return-of-premium term, and wherein the second plurality of return-of-premium fractions each increase exponentially as the corresponding multi-term insured period increases.

9. The method of claim 1, wherein the return-of-premium fraction for a policy term of 1 to 5 years is 0%.

10. The method of claim 9, wherein the return-of-premium term is 15 years.

11. The method of claim 9, wherein the return-of-premium term is 20 years.

12. The method of claim 9, wherein the return-of-premium term is 30 years.