Auto insurance risk selection is the process by which vehicle insurers determine whether or not to insure an individual and what insurance premium to charge.
Depending on the jurisdiction, the insurance premium can be either mandated by the government or determined by the insurance company in accordance to a framework of regulations set by the government.
Often, the insurer will have more freedom to set the price on physical damage coverages than on mandatory liability coverages.
When the premium is not mandated by the government, it is usually derived from the calculations of an actuary based on statistical data.
The premium can vary depending on many factors that are believed to have an impact on the expected cost of future claims.
Those factors can include the car characteristics, the coverage selected (deductible, limit, covered perils), the profile of the driver (age, gender, driving history) and the usage of the car (commute to work or not, predicted annual distance driven).
Friday, March 16, 2007
Patented risk selection systems
New risk selection methods may be patentable to a greater or lesser degree depending upon the patent laws of various countries.These patents are generally described as business method patents. The United States is fairly liberal in granting business method patents. Europe is fairly conservative.
Different forms of telematic auto insurance, for example, were independently invented and patented by a major U.S. auto insurance company, Progressive Auto Insurance us patent 5797134 and a Spanish independent inventor, Salvador Minguijon Perez EU patent 700009.
The Progressive patents cover the use of a cell phone and GPS to track movements of a car.
The Perez patent covers monitoring the car's engine control computer to determine distance driven, speed, time of day, braking force, etc.
Ironically, Progressive is developing the Perez technology in the US and Norwich Union is developing the Progressive technology for Europe under a license from Progressive. Progressive does not have to get a license to the Perez patent since it was never filed in the US.
Different forms of telematic auto insurance, for example, were independently invented and patented by a major U.S. auto insurance company, Progressive Auto Insurance us patent 5797134 and a Spanish independent inventor, Salvador Minguijon Perez EU patent 700009.
The Progressive patents cover the use of a cell phone and GPS to track movements of a car.
The Perez patent covers monitoring the car's engine control computer to determine distance driven, speed, time of day, braking force, etc.
Ironically, Progressive is developing the Perez technology in the US and Norwich Union is developing the Progressive technology for Europe under a license from Progressive. Progressive does not have to get a license to the Perez patent since it was never filed in the US.
References
^ McClenahan, Charles. Ratemaking (PDF). Casualty Actuarial Society. Retrieved on 2006-05-11.
^ What determines the price of my policy? (HTML). Insurance Information Institute. Retrieved on 2006-05-11.
^ How Are Auto Insurance Rates Calculated? (HTML). Countrywide Insurance Services. Retrieved on 2006-05-11.
^ U.S. Patent Application 20040153362 Bauer, Alan Rex; Burns, Kurtis Tavis; Esposito, Michael Vincent; Huber, David Charles JR.; O'Malley, Patrick Lawrence; "Monitoring system for determining and communicating a cost of insurance", January 2004
^ UK: Norwich Union launches innovative "Pay As You Drive"™ insurance with prices from 1p per mile, Norwich Union press release, 05 October 2006
^ Nowotarski, Mark, "Progressive Builds a Fortress of Patent Protection", Insurance IP Bulletin, October 15, 2004
^ What determines the price of my policy? (HTML). Insurance Information Institute. Retrieved on 2006-05-11.
^ How Are Auto Insurance Rates Calculated? (HTML). Countrywide Insurance Services. Retrieved on 2006-05-11.
^ U.S. Patent Application 20040153362 Bauer, Alan Rex; Burns, Kurtis Tavis; Esposito, Michael Vincent; Huber, David Charles JR.; O'Malley, Patrick Lawrence; "Monitoring system for determining and communicating a cost of insurance", January 2004
^ UK: Norwich Union launches innovative "Pay As You Drive"™ insurance with prices from 1p per mile, Norwich Union press release, 05 October 2006
^ Nowotarski, Mark, "Progressive Builds a Fortress of Patent Protection", Insurance IP Bulletin, October 15, 2004
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