Dynamic Insurance Premium Setting Based on Working Load
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Solution Overview
Problem
Conventional insurance premium systems for rented working machines set fixed premiums, leading to inefficiencies as users with lower breakdown probabilities or shorter usage periods incur higher costs, while users with higher experience or longer usage periods pay more than necessary.
Innovation Solution
An insurance premium setting system that calculates premiums based on breakdown-related information, including working information such as load, continuous usage time, and cumulative usage time, to provide personalized premiums reflecting the user's risk profile.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Ease of operation
If a fixed insurance premium is set for all users, then the insurance company can simplify the premium setting process, but users with low breakdown probability pay more than necessary while users with high breakdown probability pay insufficient premiums
Solution Approach 1:
The patent changes the parameter basis for premium calculation from a fixed value to dynamic parameters including working load, continuous working time, and cumulative working time. This allows the premium to vary according to actual usage patterns and breakdown risks, resolving the contradiction between simplicity and appropriateness by using objectively measurable parameters that are automatically collected by the working machine's control system.
Solution Approach 2:
The system implements feedback by continuously monitoring the working machine's operation data (working load, continuous working time, cumulative working time) and using this information to calculate and adjust the insurance premium. The control unit automatically receives this feedback data and processes it to determine the appropriate premium, eliminating the need for manual assessment while ensuring accuracy.
2Loss of energy
If the insurance premium is increased for users with high breakdown probability, then the insurance company can reduce losses, but such users may be discouraged from renting working machines
Solution Approach 1:
The patent applies local quality by differentiating the insurance premium for each user based on their specific usage patterns and breakdown history rather than applying a uniform rate. The premium is locally optimized for each user's risk profile using their individual data on working load, continuous working time, and cumulative working time, allowing high-risk users to pay higher premiums only when their actual usage justifies it.
Solution Approach 2:
The system makes the insurance premium dynamic rather than static. The premium changes according to the user's actual usage behavior and breakdown history, automatically adjusting upward or downward based on real-time data from the working machine. This dynamic adjustment ensures that users only pay higher premiums when their usage patterns actually pose higher risks.
3Measurement precision
If the insurance premium is set based on detailed working information, then the premium can be more accurate, but the calculation process becomes more complex
Solution Approach 1:
The working machine's control unit automatically performs the complex calculation work by itself. The control unit receives working information data from the machine's sensors and measurement devices, automatically calculates the insurance premium based on predetermined algorithms involving working load, continuous working time, and cumulative working time, and outputs the result. This self-service approach eliminates the need for external manual calculation while maintaining high precision.
Solution Approach 2:
The control unit serves multiple functions: it controls the working machine's operation, collects working information data from various sensors, calculates the insurance premium, and outputs the premium determination. By making the control unit multi-functional, the system avoids adding separate complex calculation hardware, thereby reducing overall system complexity while maintaining accurate premium calculation capabilities.
Data Source
AI summary
This insurance premium setting system sets an insurance premium for obtaining compensation for the breakdown of a working machine, when the working machine is rented out. The insurance premium setting system is provided with an insurance premium setting unit which sets the insurance premium on the basis of breakdown-related information which is related to the possibility of breakdown of the working machine, when a user uses the working machine. The breakdown-related information is working information on the working machine, and the insurance premium setting unit sets the insurance premium on the basis of the working information. The working information includes a working load of the working machine, and the insurance premium setting unit sets the insurance premium more expensively, as the working load becomes larger.