In general, workers' compensation is calculated through an assigned manual rate of pay per $100 of payroll, based on the industry which the company operates in. The rate of pay is based on years of historical data.
Two recent patent applications discuss innovative methods for estimating the risk calculation of workers' compensation policies, allowing the patent applicants to charge premiums more in line with their actual risk.
The first application, assigned to Guard Insurance Group, allows an insurance company to constantly adjust its premiums based on real-time payroll data, rather than adjusting premiums on a quarterly or annual basis.
This business model can be used to more accurately calculate and update, in real-time, the premium for workers' comp insurance. If this patent application is issued, it may provide Guard Insurance with the opportunity to offer an alternative method of premium calculation and payment for its customer base.
The second application allows an insurance company to assess risks based on real-time employee location and adjust premiums based on that.
With the help of sensors in a work environment to track and monitor employee presence in various locations, the system would be able to discern whether, for instance, an employee spent more time in an office environment as opposed to the manufacturing floor.
If this patent application issues, it would provide competitive differentiation through a unique and customized service for the assignee's client base.
A company that believes it has lower risks of injury than the rest of the industry as a result of restricted access to dangerous parts of its facility may be attracted to this type of policy as a way to reduce insurance costs.
Another recent filing concerns reinsurance quoting systems. Quoting, negotiating, and issuing reinsurance policies is often an extended process that can be very time consuming. But U.S. patent application No. US 20050075910, seeks to simplify and expedite the steps required to develop and issue a reinsurance policy through the use of real-time, electronic processing.
Data from a primary insurer is transferred through a Web-server to an application server to generate a reinsurance quote, according to the patent document. The application server accesses actuarial tables stored in a database to generate and store the reinsurance quote, and the system may also generate a profitability analysis for the primary insurer and reinsurer.
The system may further provide the applicant with a strong competitive position in the electronic systems for quoting reinsurance space, making it difficult for competitors to develop similar capabilities, and thus forcing competitors to license the technology.
July 1, 2008
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