Actuary-Editable Rating Model Automation
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Solution Overview
Problem
Current computational techniques in the insurance industry require high programming expertise for creating and maintaining rating models, leading to lengthy cycle times for quote preparation and inadequate real-time capabilities.
Innovation Solution
Automated techniques transform actuary-manipulable rating models into executable forms using Java-based environments and metadata encodings like XML, allowing business users to define and review rating models, facilitating rapid deployment and update of insurance product offerings.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Ease of manufacture
If conventional programming techniques are used to create and maintain rating models, then programming expertise is required, but cycle times for quote preparation become lengthy (days to weeks)
Solution Approach 1:
The patent introduces an automated transformation system as an intermediary between actuary-manipulable rating models and executable quote preparation systems. This intermediary automatically translates models defined in business-friendly formats into optimized executable code, eliminating the need for manual programming while reducing cycle times from days/weeks to minutes. The transformation system acts as a mediator that converts high-level business logic into low-level executable instructions.
Solution Approach 2:
The patent replaces manual mechanical programming processes with automated computational transformation. Instead of requiring actuaries to write and maintain code manually, the system uses automated algorithms to transform rating models into executable form. This substitution of mechanical programming with automated computation dramatically reduces both the skill requirement and time needed for quote preparation.
2Ease of operation
If conventional rating models are used, then programming expertise is required for maintenance, but real-time quote capability is inadequate
Solution Approach 1:
The patent applies preliminary action by pre-compiling and optimizing rating models into executable form before they are needed for quote preparation. The transformation system prepares optimized executable code in advance, so that when quotes need to be generated, the system can immediately execute pre-optimized code rather than interpreting or compiling models in real-time. This preliminary preparation enables fast real-time quote processing while keeping the original actuary-manipulable models easy to maintain.
3Productivity
If automated transformation is implemented, then quote processing speed increases (seconds for life-by-life rating), but system complexity increases
Solution Approach 1:
The patent segments the rating model into distinct components: actuary-manipulable definition layer, automated transformation layer, and executable execution layer. This segmentation allows each component to be optimized independently - the definition layer remains simple and business-friendly, the transformation layer handles complexity automatically, and the execution layer optimizes for speed. This modular segmentation achieves high productivity while managing system complexity through clear separation of concerns.
Data Source
AI summary
Techniques have been developed whereby an actuary-manipulable rating model may be defined and transformed into executable form using automated techniques. By allowing business users to define, review and revise rating models using familiar methodologies and constructs (such as factor tables) and by providing an automated facility for transformation of the rating model into an efficient executable form, systems and techniques in accordance with some embodiments of the present invention facilitate rapid deployment and update of insurance product offerings.