Systems, Methods, and Apparatus for Insurance Pricing

Abstract

Systems, methods, apparatus, computer program code and means for rating and pricing insurance policies are provided. In some embodiments, an automated insurance processing platform rates and prices insurance policies by including a territory factor in the calculation of a premium for the policy. Pursuant to some embodiments, the territory factor is calculated by receiving historical loss data, geographical data, and demographic data, analyzing the historical loss data, the geographical data, and the demographic data to identify data having similar claim behaviors. The historical loss data is analyzed to identify at least a frequency and severity of historical loss by coverage type. The frequency and severity of loss data, the geographical data, and the demographic data is iteratively analyzed to create a territory set having different geographical boundaries for the different coverage types; and the territory set is used to generate a set of territory factors for the different coverage types and the territories.

What is claimed is: 
     
         1 . A computer system for providing quotes for business insurance policies for business owners, the system comprising:
 one or more data storage devices storing insurance coverage data, insurance coverage formula data, historical loss data, geographical area data for a plurality of geographical areas, and demographic data;   one or more computer processors in communication with the one or more data storage devices;   a communication device to receive information associated with a business to be insured;   a memory in communication with the one or more computer processors and storing program instructions, the one or more computer processors operative with the program instructions to:
 receive, via a web interface, a quote request for a business insurance policy for a business owner; 
 determine at least a first applicable insurance coverage for the business owner; 
 identify, based on the at least first applicable insurance coverage and the insurance coverage formula data, at least a first relevant coverage formula including at least a first territory factor based on a geographical location associated with a location for the business of the business owner;
 wherein the first territory factor is determined by the one or more computer processors based on:
 iteratively clustering said historical loss data by analyzing multiple scenarios, each scenario determined by applying a number of reductions to most similar neighboring clusters and producing an interim result, the number of reductions associated with each of the multiple scenarios being determined responsive to one of a plurality of increment values; 
 comparing each of said interim results each involving a different grouping of geographical areas to select one of said interim results for use, the selected one of said interim results having geographical area groups with similar risk exposure data; and 
 assigning a territory factor to each of said geographical area groups with similar risk exposure data; 
 
 
 determine a first price for said at least first applicable insurance coverage based on said business location for the business and said at least first relevant coverage formula including the at least first territory factor; and 
 transmit a business owners policy quotation for the business insurance policy for the business owner. 
   
     
     
         2 . The system of  claim 1 , wherein said at least first territory factor is selected based on a geographical area associated with said location for the business of the business owner. 
     
     
         3 . The system of  claim 1 , wherein said at least first territory factor comprises a plurality of the geographical areas having at least one of a similar loss exposure characteristic and a similar demographic characteristic. 
     
     
         4 . The system of  claim 1 , wherein said at least first relevant coverage formula is at least one of a building rating formula and a business personal property rating formula. 
     
     
         5 . The system of  claim 1 , wherein said memory further stores program instructions operative with the one or more computer processors to identify a coverage type associated with said quote request, said coverage type comprising at least one of a building and contents coverage type. 
     
     
         6 . The system of  claim 1 , wherein said memory further stores program instructions operative with the one or more computer processors to:
 identify a value of a property associated with said quote request;   calculate a net rate associated with said property and said first price for said at least first applicable insurance coverage;   calculate the premium for optional coverage as a product of said net rate and an optional coverage amount; and   transmit said premium for said optional coverage with said business owners policy quotation.   
     
     
         7 . The system of  claim 1 , wherein said memory further stores program instructions operative with the one or more computer processors to:
 determine a likelihood of the business incurring an administrative expense;   calculate, based on said likelihood, the policy expense fee; and   transmit said policy expense fee with said business owners policy quotation.   
     
     
         8 . The system of  claim 1 , wherein the first territory factor is further determined by the one or more computer processors, prior to iteratively clustering the historical loss data:
 analyzing said historical loss data, said geographical area data, and said demographic data to identify one or more significant geographical variables and risk characteristic data;   adjusting said historical loss data to remove effects of said significant geographical variables and said risk characteristic data;   smoothing said adjusted historical loss data using a smoothing algorithm; and   combining said smoothed data with said significant geographical variables and said risk characteristic data;   wherein iteratively clustering said historical loss data comprises iteratively clustering said combined data.   
     
     
         9 . The system of  claim 1 , wherein said memory storing program instructions to determine the at least first applicable insurance coverage for the business owner comprises the memory storing program instructions to receive, via the web interface, the first applicable insurance coverage. 
     
     
         10 . The system of  claim 1 , wherein said memory storing program instructions to determine the at least first applicable insurance coverage for the business owner comprises the memory storing program instructions to identify the at least first applicable insurance coverage from the insurance coverage data. 
     
     
         11 . The system of  claim 1 , wherein said memory storing program instructions to determine the first price for said at least first applicable insurance coverage comprises said memory storing program instructions to calculate the first price based on said business location for the business and said at least first relevant coverage formula including the at least first territory factor. 
     
     
         12 . The system of  claim 1 , wherein said memory storing program instructions to determine the first price for said at least first applicable insurance coverage comprises said memory storing program instructions to query a rating database for the first price based on said business location for the business and said at least first relevant coverage formula including the at least first territory factor. 
     
     
         13 . The system of  claim 1 , wherein said memory further stores program instructions to calculate said first relevant coverage based on said at least first relevant coverage formula. 
     
     
         14 . The system of  claim 1 , wherein said memory further stores program instructions to query a database for the first relevant coverage based on said at least first relevant coverage formula 
     
     
         15 . A computer-implemented method for providing quotes for business insurance policies for business owners, the method comprising:
 storing in one or more data storage devices insurance coverage data, insurance coverage formula data, historical loss data, geographical area data for a plurality of geographical areas, and demographic data;   receiving, by one or more computer processors, a quote request for a business insurance policy for a business owner;   determining, by the one or more computer processors, at least a first applicable insurance coverage for the business to be insured;   identifying, by the one or more computer processors from the insurance coverage formula data stored in the one or more data storage devices and based on the obtained at least first applicable insurance coverage, at least a first relevant coverage formula including at least a first territory factor based on a geographical location associated with a location for the business to be insured;   wherein the first territory factor is determined by the one or more computer processors by:
 iteratively clustering said historical loss data by analyzing multiple scenarios, each scenario determined by applying a number of reductions to most similar neighboring clusters and producing an interim result, the number of reductions associated with each of the multiple scenarios being determined responsive to one of a plurality of increment values; 
 comparing, by the one or more computer processors, each of said interim results each involving a different grouping of geographical areas to select one of said interim results for use, the selected one of said interim results having geographical area groups with similar risk exposure data; and 
 assigning, by the one or more computer processors, a territory factor to each of said geographical area groups with similar risk exposure data; 
   determining, by the one or more computer processors, a first price for said at least first applicable insurance coverage based on said location for the business and said at least first relevant coverage formula including the at least first territory factor; and   transmitting, by the one or more computer processors, a business owners policy quotation for the business insurance policy for the business owner.   
     
     
         16 . The method of  claim 15 , wherein said at least first territory factor is selected based on a geographical area associated with said location for the business. 
     
     
         17 . The method of  claim 15 , wherein said at least first territory factor comprises a plurality of geographical areas having at least one of a similar loss exposure characteristic and a similar demographic characteristic. 
     
     
         18 . The method of  claim 15 , wherein said at least first relevant coverage formula is at least one of a PREM/OPS formula, a business interruption rating formula, and an equipment breakdown formula. 
     
     
         19 . The method of  claim 15 , further comprising identifying, by the one or more computer processors, a coverage type associated with said quote request, said coverage type comprising at least one of a business income coverage type and a liability coverage type. 
     
     
         20 . The method of  claim 15 , further comprising:
 identifying, by the one or more computer processors, a value of a property associated with said quote request;   calculating, by the one or more computer processors, a net rate associated with said property and said first price for said at least first applicable insurance coverage;   calculating, by the one or more computer processors, a premium for optional coverage as a product of said net rate and an optional coverage amount; and   transmitting, by the one or more computer processors, said premium for said optional coverage with said business owners policy quotation.   
     
     
         21 . The method of  claim 15 , further comprising:
 determining, by the one or more computer processors, a likelihood of the business incurring an administrative expense;   calculating, by the one or more computer processors and based on said likelihood, a policy expense fee; and   transmitting, by the one or more computer processors, said policy expense fee with said business owners policy quotation.   
     
     
         22 . The method of  claim 15 , wherein the determining the first territory factor further comprises, prior to iteratively clustering the historical loss data:
 analyzing, by the one or more computer processors, said historical loss data, said geographical area data, and said demographic data to identify one or more significant geographical variables and risk characteristic data;   adjusting, by the one or more computer processors, said historical loss data to remove effects of said significant geographical variables and said risk characteristic data;   smoothing, by the one or more computer processors, said adjusted historical loss data using a smoothing algorithm; and   combining, by the one or more computer processors, said smoothed data with said significant geographical variables and said risk characteristic data;   wherein iteratively clustering said historical loss data comprises iteratively clustering said combined data.   
     
     
         23 . The method of  claim 15 , wherein determining at least a first applicable insurance coverage for the business owner comprises one of: receiving, by the one or more computer processors, the first applicable insurance coverage in association with the quote request, and identifying, by the one or more computer processors, the at least first applicable insurance coverage from the insurance coverage data. 
     
     
         24 . The method of  claim 15 , wherein determining the first price for said at least first applicable insurance coverage comprises one of: calculating the first price based on said business location for the business and said at least first relevant coverage formula including the at least first territory factor, and querying a rating database for the first price based on said business location for the business and said at least first relevant coverage formula including the at least first territory factor. 
     
     
         25 . The method of  claim 15 , further comprising calculating said first relevant coverage based on said at least first relevant coverage formula. 
     
     
         26 . The method of  claim 15 , further comprising querying a database for the first relevant coverage based on said at least first relevant coverage formula. 
     
     
         27 . A computer system for determining territory factors for business insurance policies for business owners, the system comprising:
 one or more data storage devices storing insurance coverage data, insurance coverage formula data, historical loss data, geographical area data, and demographic data;   one or more computer processors in communication with the one or more data storage devices;   a communication device to receive information associated with a business to be insured;   a memory in communication with the one or more computer processors and storing program instructions, the one or more computer processors operative with the program instructions to:
 iteratively cluster said historical loss data by analyzing multiple scenarios, each scenario determined by applying a number of reductions to most similar neighboring clusters and producing an interim result, the number of reductions associated with each of the multiple scenarios being determined responsive to one of a plurality of increment values; 
 compare each of said interim results each involving a different grouping of geographical areas to select one of said interim results for use, the selected one of said interim results having geographical area groups with similar risk exposure data; 
 assign a territory factor to each of said geographical area groups with similar risk exposure data for rating and pricing insurance policies for entities located in said geographical area groups; and 
 store, in the one or more data storage devices, territory factors comprising the territory factor for each of said geographical area groups with similar risk exposure data. 
   
     
     
         28 . The system of  claim 27 , wherein the one or more computer processors are further operative with the program instructions to:
 provide a web interface for receiving a quote request for a business insurance policy for a business owner;   receiving at least a first application insurance coverage for the business to be insured;   identify, based on the obtained at least first applicable insurance coverage, the insurance coverage formula data, and the stored territory factors, at least a first relevant coverage formula including at least a first territory factor of the stored territory factors based on a geographical location associated with a business address for the business to be insured;   receiving a first price for said at least first applicable insurance coverage based on said business address and said at least first relevant coverage formula including the at least first territory factor; and   transmit a business owners policy quotation for the business insurance policy for the business owner, wherein said business owners policy quotation includes said at least first applicable insurance coverage and said first price for said at least first applicable insurance coverage.   
     
     
         29 . The system of  claim 28 , wherein said memory further stores program instructions operative with the one or more computer processors to:
 identify a value of a property associated with said quote request;   calculate a net rate associated with said property and said first price for said at least first applicable insurance coverage;   calculate the premium for optional coverage as a product of said net rate and an optional coverage amount; and   transmit said premium for said optional coverage with said business owners policy quotation for the business insurance policy for the business owner.   
     
     
         30 . The system of  claim 27 , wherein said memory further stores program instructions operative with the one or more computer processors to, prior to iteratively clustering the historical loss data:
 analyze said historical loss data, said geographical area data, and said demographic data to identify one or more significant geographical variables and risk characteristic data;   adjust said historical loss data to remove effects of said significant geographical variables and said risk characteristic data;   smooth said adjusted historical loss data using a smoothing algorithm; and   combine said smoothed data with said significant geographical variables and said risk characteristic data;   wherein iteratively clustering said historical loss data comprises iteratively clustering said combined data.