Comparative Rating Engine for Insurance Rate Adjustment
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Solution Overview
Problem
Different insurance providers often quote similar customers different rates for the same insurance policy, making it difficult for customers to compare and find the lowest priced option, and for providers to efficiently manage these comparisons.
Innovation Solution
A method and system that adjusts insurance rates based on predefined rules, allowing a server to compare and select the lower rate between two providers, while maintaining a consistent application fee and provider rate, using a comparative rating engine and rules database to determine and adjust insurance rates for various types of insurance.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If multiple insurance providers quote rates for the same customer, then customers can compare and find lower prices, but it becomes difficult for customers to efficiently compare and for providers to manage these comparisons
Solution Approach 1:
The patent introduces a third-party rating bureau as an intermediary that collects, standardizes, and compares insurance rates from multiple providers. This mediator receives rate information from various insurance companies, applies consistent rating criteria, and delivers standardized comparative results to customers, thereby simplifying the complexity of direct multi-provider comparisons while maintaining adaptability across different providers and customer scenarios.
2Productivity
If insurance providers offer different rates for similar policies, then customers benefit from price competition, but providers face difficulty in managing and standardizing their rate structures
Solution Approach 1:
The patent transforms insurance rates into standardized parameters by applying consistent rating criteria across all providers. The rating bureau converts diverse provider rates into a common format using standardized underwriting classes and rating factors, enabling efficient comparison and management. This parameter standardization maintains price competition benefits while reducing the complexity of managing diverse rate structures across multiple providers.
Data Source
AI summary
According to certain embodiments of the present invention, a method is provided to determine (at a server) an initial first insurance rate for Provider A and a first insurance rate for Provider B. Both the initial first insurance rate for Provider A and the first insurance rate for Provider B correspond to a first insurance type. The initial first insurance rate for Provider A is adjusted A according to a first adjustment rule to form an adjusted first insurance rate for Provider A. A lower of the adjusted first insurance rate for Provider A or the first insurance rate for Provider B is selected. The adjusted first insurance rate for Provider A may be greater than the initial first insurance rate for Provider A and less than the first insurance rate for Provider B. An application fee for the adjusted first insurance rate for Provider A may be greater than an application fee for the initial first insurance rate for Provider A.