Adaptive Risk Transfer Structure for Insurance Systems
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Solution Overview
Problem
Existing automated insurance systems lack a flexible and adaptable risk transfer structure that can optimize risk exposure for a variable number of risk components, often relying on proportional or non-proportional approaches that are not dynamically adjustable, limiting their effectiveness in managing risk and ensuring operational stability.
Innovation Solution
An event-triggered switching device that connects two coupled insurance systems through payment-transfer modules, utilizing a top-down table with variable risk transfer segments and an assembly module to dynamically adjust and optimize risk transfer, allowing for proportional and non-proportional risk sharing based on actual losses and risk exposure, thereby providing self-sufficient risk protection.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If traditional proportional or non-proportional risk transfer structures are used, then the system structure is simple, but the system lacks flexibility and adaptability to dynamically adjust risk exposure
Solution Approach 1:
The risk transfer structure is segmented into multiple risk transfer segments, each with its own segment value representing a specific risk exposure level. This segmentation allows the system to dynamically adjust risk transfer by activating specific segments based on actual losses, providing flexibility without requiring complete structural redesign.
Solution Approach 2:
The patent implements a dynamic risk transfer structure where segment values can be adjusted based on changing risk conditions. The system transitions from static proportional/non-proportional approaches to a dynamic model that adapts risk transfer ratios according to actual losses and risk exposure levels, enabling real-time optimization.
2Reliability
If dynamic adjustment of risk transfer is implemented, then the system can optimize risk exposure, but the operational complexity increases
Solution Approach 1:
The system pre-calculates and stores multiple risk transfer segments with predetermined segment values before risk events occur. This preliminary structuring allows rapid switching between risk transfer modes during actual loss events without requiring complex real-time calculations, reducing operational complexity while maintaining dynamic optimization capability.
Solution Approach 2:
The patent introduces an intermediary switching mechanism that manages the complexity of transitioning between different risk transfer segments. This intermediary layer handles the computational and operational complexity of dynamic adjustment, isolating it from the core insurance operations and simplifying the overall system architecture.
3Productivity
If resource pooling is minimized, then the system is more efficient, but the system may lack sufficient resources to cover losses
Solution Approach 1:
The system implements partial resource pooling by activating only the necessary risk transfer segments based on actual losses and risk exposure. Instead of pooling all resources continuously, the system pools resources partially and dynamically, activating additional segments only when needed, thus improving efficiency while maintaining sufficient risk protection through on-demand resource allocation.
Data Source
AI summary
A system and a method, the method including assigning a payment parameter to each variable risk transfer segment of a top-down table and accumulating payment parameters to a total payment sum, capturing payment transfer parameters from a first payment-transfer device to a second payment-transfer device, and when the total payment sum at the second payment-transfer device has been triggered, transferring the risk exposure of a first insurance system associated with the variable risk transfer segments of the top-down table to a second insurance system.