U.S. patent application number 11/556825 was filed with the patent office on 2007-03-15 for system and method for the assessment, pricing, and provisioning of distance-based vehicle insurance.
This patent application is currently assigned to MileMeter, Inc.. Invention is credited to Chris Gay.
Application Number | 20070061173 11/556825 |
Document ID | / |
Family ID | 36263207 |
Filed Date | 2007-03-15 |
United States Patent
Application |
20070061173 |
Kind Code |
A1 |
Gay; Chris |
March 15, 2007 |
System and method for the assessment, pricing, and provisioning of
distance-based vehicle insurance
Abstract
A system and method for assessing, pricing, and provisioning
distance-based vehicle insurance are provided. In one example, the
method receives identification information of a customer and an
associated vehicle, and a current odometer reading. Multiple
coverage types are provided to the customer, as is at least one
quote when the customer selects one of the coverage types. The
quote includes a policy rate identifying a cost per distance unit
based on the identification information. The customer is provided
with multiple items based on the quote, where each item includes a
total number of distance units for purchase at the policy rate. An
insurance policy may be purchased in response to the customer
selecting one of the items. The insurance policy's coverage is
based on an expiration odometer value defined as the sum of the
current odometer reading and the total number of distance units
included in the selected item.
Inventors: |
Gay; Chris; (Dallas,
TX) |
Correspondence
Address: |
FELLERS SNIDER BLANKENSHIP;BAILEY & TIPPENS
THE KENNEDY BUILDING
321 SOUTH BOSTON SUITE 800
TULSA
OK
74103-3318
US
|
Assignee: |
MileMeter, Inc.
3723 South FM-551
Royse City
TX
75189
|
Family ID: |
36263207 |
Appl. No.: |
11/556825 |
Filed: |
November 6, 2006 |
Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
|
|
10977712 |
Oct 29, 2004 |
|
|
|
11556825 |
Nov 6, 2006 |
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Current U.S.
Class: |
705/4 |
Current CPC
Class: |
G06Q 10/10 20130101;
G06Q 40/08 20130101 |
Class at
Publication: |
705/004 |
International
Class: |
G06Q 40/00 20060101
G06Q040/00 |
Claims
1. A method for assessing, pricing, and provisioning distance-based
vehicle insurance, the method comprising: receiving identification
information of a customer and an associated vehicle; receiving a
current odometer reading of the vehicle; providing a plurality of
coverage types to the customer; providing the customer with at
least one quote upon receiving a selection from the customer of one
of the coverage types, wherein the quote includes a policy rate
identifying a cost per distance unit based on the customer and
vehicle identification information; providing the customer with a
plurality of pre-calculated items based on the quote, wherein each
item includes a total number of distance units for purchase at the
policy rate; and performing a purchase transaction for an insurance
policy in response to the customer selecting one of the items for
purchase, wherein coverage provided by the insurance policy is
based on an expiration odometer value defined as the sum of the
current odometer reading and the total number of distance units
included in the selected item, and wherein the current odometer
reading is not audited prior to or during the purchase
transaction.
2. The method of claim 1, wherein the step of receiving a current
odometer reading of the vehicle further comprises receiving an
odometer reading of the vehicle from the customer.
3. The method of claim 1, further comprising: receiving an updated
odometer reading of the vehicle; calculating whether the updated
odometer reading is within a predefined number of distance units
from the expiration odometer value; and notifying the customer if
the updated odometer reading is within the predefined number of
distance units.
4. The method of claim 3 wherein notifying the customer includes
offering the customer a renewal option to purchase additional
insurance.
5. The method of claim 3 wherein the updated odometer reading is
received from at least one of emission testing of the vehicle,
maintenance of the vehicle, sale of the vehicle, purchase of the
vehicle, registration of the vehicle, and an accident record of the
vehicle.
6. The method of claim 1, further comprising: receiving an
insurance claim from the customer; determining if the purchased
insurance has expired; and calculating a premium insurance amount
if the purchased insurance has expired, wherein the premium
insurance amount must be paid by the customer before the insurance
claim is paid.
7. The method of claim 6, wherein the premium insurance amount is
calculated based on the vehicle's odometer reading at the time of
the insurance claim, the expiration odometer reading, the policy
rate, and an adjustment value.
8. The method of claim 1, further comprising: receiving an
identification of a referring customer from the customer;
calculating a distance-based credit for the referring customer
based on the insurance policy; and crediting an insurance account
associated with the referring customer.
9. The method of claim 8, wherein crediting the referring
customer's insurance account includes adding additional miles to
the account.
10. The method of claim 9, wherein the additional miles are equal
to ((a percentage)*(a dollar value of the insurance policy
purchased by the customer))/(the referring customer's policy
rate).
11. The method of claim 1, wherein the coverage provided by the
insurance policy is also based on a predefined period of time.
12. The method of claim 11, further comprising: determining whether
a current odometer reading at the end of the predefined period of
time is greater or lesser than the expiration odometer value; and
charging the customer for the difference between the current
odometer reading and the expiration odometer value if the current
odometer reading is greater, or crediting the customer for the
difference between the current odometer reading and the expiration
odometer value if the expiration odometer value is greater.
13. A method of providing automobile insurance, the method
comprising: receiving customer information from a customer;
receiving automobile information from the customer, the automobile
information including a first odometer reading of an automobile;
determining a rate based upon the customer information and the
automobile information; offering at least one insurance policy
option, the at least one option including an offer to insure the
automobile at a cost per unit distance of coverage; receiving a
customer selection of a number of units of distance of coverage;
receiving a payment for the number of units of distance of
coverage, the payment based on the cost per unit distance; and
insuring the customer and automobile while a current odometer
reading of the automobile is less than the sum of the first
odometer reading and the customer selection of a number of units
distance of coverage; wherein an odometer audit is not performed
prior to initiating coverage for the automobile and customer.
14. The method of claim 13, wherein the step of offering at least
one insurance policy option further comprises offering a plurality
of coverage limits.
15. The method of claim 13, further comprising obtaining an
odometer audit before paying an insurance claim resulting from
insuring the customer and automobile.
16. The method of claim 13, wherein no odometer tracking device is
placed on the vehicle.
17. A method of providing automobile insurance, the method
comprising: receiving customer information from a customer;
receiving automobile information from the customer, the automobile
information including a first odometer reading of an automobile;
determining a comprehensive insurance rate based upon the customer
information and the automobile information; determining a collision
and liability insurance rate based upon the customer information
and the automobile information; offering at least one insurance
policy option, the at least one option including an offer to insure
the customer and automobile at a rate per unit of time for
comprehensive insurance and a cost per unit distance for liability
and collision insurance; providing comprehensive insurance to the
customer and automobile while a customer selected unit of time has
not lapsed; and providing collision and liability insurance to the
customer and automobile while a current odometer reading of the
automobile is less than the sum of the first odometer reading and a
customer selected of a number of units distance of coverage;
wherein an odometer audit is not performed prior to initiating
coverage for the automobile and customer.
18. The method of claim 13, wherein the step of offering at least
one insurance policy option further comprises offering a plurality
of coverage limits for the liability and collision insurance.
19. The method of claim 17, further comprising obtaining an
odometer audit before paying a claim.
20. The method of claim 17, wherein the automobile is not provided
with an odometer monitoring device.
Description
CROSS REFERENCE TO RELATED APPLICATIONS
[0001] This application is a continuation of U.S. patent
application Ser. No. 10/977,712, filed Oct. 29, 2004, which is
hereby incorporated by reference.
BACKGROUND OF THE INVENTION
[0002] Conventional methods for pricing and selling vehicle
insurance are generally based upon time periods (e.g., months or
years), also known as terms. An applicant's data, such as age, sex,
location of residence, and driving record are combined with other
factors to create an actuarial class, which is then used to arrive
at a price. This price is then associated with a unit of exposure.
In conventional insurance, the unit of exposure is a period of time
(a term). As the insurance contract is then principally defined
based upon the exposure unit, conventional insurance contracts are
principally defined by the term. However, such conventional
insurance mixes a fixed cost with a variable usage pattern. Among
other disadvantages, this approach penalizes low mileage
customers.
[0003] Accordingly, what is needed is an improved system and method
for addressing such issues.
BRIEF DESCRIPTION OF THE DRAWINGS
[0004] FIG. 1 is a flowchart of one embodiment of a method for
assessing, pricing, and provisioning distance-based vehicle
insurance.
[0005] FIG. 2 is a diagram of one embodiment of a system within
which the method of FIG. 1 may be implemented.
[0006] FIG. 3 is a flow chart of one embodiment of a method for
using the system of FIG. 2.
[0007] FIGS. 4-8 are exemplary screenshots illustrating various
displays of the system of FIG. 2.
[0008] FIG. 9 is a flowchart of one embodiment of a method for
calculating and applying a credit for a referral.
[0009] FIG. 10 is a flowchart of one embodiment of a method for
determining whether an insurance policy is about to expire and
notifying the customer of the upcoming expiration.
[0010] FIG. 11 is an exemplary windshield sticker that may be
generated by the method of FIG. 10.
[0011] FIG. 12 is a diagram of one embodiment of a system within
which the method of FIG. 10 may be implemented.
[0012] FIG. 13 is a flowchart of one embodiment of a method for
calculating a premium for use in processing a claim based on an
expired insurance policy.
[0013] FIG. 14 is a diagram of a portion of one embodiment of a
distance-based insurance policy.
[0014] FIG. 15 is a diagram of a portion of one embodiment of an
adjusted term insurance policy.
DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS
[0015] The present disclosure relates to a system and method for
the assessment, pricing, and provisioning of distance-based vehicle
insurance. However, it is understood that the following disclosure
provides many different embodiments or examples. Specific examples
of components and arrangements are described below to simplify the
present disclosure. These are, of course, merely examples and are
not intended to be limiting. In addition, the present disclosure
may repeat reference numerals and/or letters in the various
examples. This repetition is for the purpose of simplicity and
clarity and does not in itself dictate a relationship between the
various embodiments and/or configurations discussed.
[0016] Referring to FIG. 1, in one embodiment, a computer
implemented method 100 may be used for providing distance-based
insurance to a user (e.g., a customer). As will be described later
in greater detail, the distance-based insurance enables variable
use to be paired with variable pricing, in contrast to conventional
term insurance, where a fixed cost is paired with variable usage.
Accordingly, the method 100 enables distance-based insurance to be
purchased and used like a utility, allowing costs to accurately
reflect usage, eliminating inefficient pricing, and creating
consumer choice.
[0017] Distance-based insurance may also improve the insurer's risk
management by aligning consumer pricing with the best predictor of
future insurance claims--vehicle mileage. Extensive research on the
relationship between annual mileage and insurance claims suggest
that if other risk factors (such as driver age, location, and
vehicle use) are constant, then accident risk tends to increase in
a roughly linear relationship with mileage. Distance-based
insurance may encourage beneficial risk-pool selection by being
most advantageous to low-mileage (and hence, lower risk)
drivers.
[0018] The method 100 begins by receiving customer and vehicle
identification information in step 102. The customer identification
information may include such information as driver's license
number, age, gender, and address. The vehicle identification
information may include such information as license plate number,
vehicle identification number (VIN), and vehicle make, model, and
year. In step 104, a current odometer reading of the vehicle is
received. It is understood that the odometer units (e.g., miles or
kilometers) may differ depending on such factors as the location of
the vehicle or its origin. Furthermore, it is understood that no
odometer audit or verification is performed by the insurance
provider during the method 100. The odometer reading entered by the
customer is used as the current odometer reading.
[0019] In step 106, multiple coverage types are provided to the
customer. Exemplary coverage types may include recommended,
economy, and minimal coverage. It is understood that some aspects
of the coverage types may be controlled by applicable state
regulations. In step 108, upon receiving an input selecting one of
the coverage types, the customer is provided with at least one
quote. The quote includes a policy rate identifying a cost per
distance unit (e.g., $0.05/mile) based on the customer and vehicle
identification information. Accordingly, the cost per mile includes
various factors based on a risk assessment.
[0020] In step 110, the customer is provided with multiple
pre-calculated items based on the quote. Each of the pre-calculated
items includes a total number of distance units for purchase at the
policy rate. For example, one item may provide 5000 miles of
coverage for $250 (i.e., $0.05*5000), while another item may
provide 6000 miles of coverage for $300 (i.e., $0.05*6000). It is
understood that various alterations may be made in the calculations
to provide, for example, an incentive for a customer to purchase
additional miles. For example, the policy rate may be reduced to
$0.049 upon the purchase of 10,000 miles. In step 112, a purchase
transaction for an insurance policy may be performed in response to
input from the customer selecting one of the items for purchase.
The insurance policy includes an expiration odometer value defined
as the sum of the current odometer reading and the total number of
distance units included in the selected item. Accordingly, the
method 100 enables a distance-based vehicle insurance policy to be
purchased without a physical inspection of the odometer reading by
the insurer prior to purchase, and without the use of odometer
audits or verifications, or any type of tracking device placed in
the vehicle.
[0021] Referring to FIG. 2, a system 200 illustrates one embodiment
of a system that may be used to provide distance-based vehicle
insurance. For example, the method 100 of FIG. 1 may be implemented
within the system 200. In the present example, the system 200
includes a kiosk 202 at which a user (not shown) may price, select,
and purchase distance-based insurance. It is understood that other
systems (e.g., a website) may provide similar functionality.
[0022] The kiosk 202 includes a number of components to provide
information to the user and to receive and process input from the
user. For example, the kiosk 202 may include a central processing
unit (CPU) 204 coupled to a memory unit 206, an input/output
("I/O") device 208, a network interface 210, a printer 212, and a
magnetic stripe reader (MSR) 214. The network interface may be, for
example, a modem (e.g., a V.90 modem) and/or one or more network
interface cards (NICs) that are each associated with a media access
control (MAC) address. The network interface 210 may be compatible
with any of a variety of wireline and wireless network
technologies, such as TCP/IP and/or Bluetooth. The components 202,
204, 206, 208, 210, and 212 are interconnected by a bus system 216,
which may include wireless and/or wired communication paths.
[0023] The components may be located in a single storage unit in
the kiosk 202 or may be configured in many different ways. For
example, the CPU 204, memory unit 206, PO device 208, and network
interface 210 may be located within the kiosk 202 as part of a
single computer, and the printer 212 and MSR 214 may be attached as
peripherals. In addition, it is understood that each of the listed
components may actually represent several different components. For
example, the CPU 204 may represent a multi-processor or a
distributed processing system; the memory unit 206 may include
different levels of cache memory, main memory, hard disks, and
remote storage locations; and the I/O device 208 may include
monitors, keyboards, touch screen displays, and the like. The
printer 212 may be one or more printers and may utilize thermal
printing or other suitable printing technologies. For example, the
printer 212 may represent a thermal printer for vinyl stock and
another thermal printer for coated paper stock.
[0024] The network interface 210 may be connected to a network 218.
The network 218 may be, for example, a subnet of a local area
network, a company wide intranet, and/or the Internet. Because the
network interface 210 may be connected to the network 218, certain
components may, at times, be shared with other computers (not
shown). Therefore, a wide range of flexibility is anticipated in
the configuration of the kiosk and its components. Furthermore, it
is understood that, in some implementations, CPU 204 may act as a
server to other computers.
[0025] Coupled to the kiosk 202 via the network 218 is a server
220. The server 220 may be one of a plurality of servers and may be
selected for handling a particular user's request by a network
device such as a router (not shown). The router may handle all
communication requests by delegating them in round-robin fashion
(or using another allocation/load balancing process) amongst the
servers. The server 220 is coupled to or includes an actuarial
engine 222, which utilizes information stored in a database 224.
The actuarial engine 222 and database 224 may be used to determine
an actuarial class for the customer as well as an associated price
per mile, as will be described later. The server, which includes a
processor and memory (not shown) may execute software instructions
needed to access the actuarial engine 222 and database 224, as well
as to communicate with the CPU 204. In some embodiments, the server
220 may host all or part of a website comprising various web pages
and/or executable code for providing similar functionality to that
of the present example.
[0026] The CPU 204 includes a plurality of software instructions
for an operating system that handles peripheral device
communication, network communication, and hosts a local
point-of-sale (POS) application for customer use. The CPU 204 and
its associated components may communicate all customer information
and selections over the network 218 to the server 220, or the CPU
204 may perform some or all processing functions itself.
[0027] In operation, a customer interacts with the kiosk 202 via
the touch screen display 208, which allows the customer to both
read and enter data (the latter by use of an onscreen keyboard).
When queried by the POS application for driver's license
information, the customer swipes his driver's license in the MSR
214 (assuming the driver's license includes a magnetic stripe
containing such information). When queried by the POS application
for credit card information, the customer swipes his credit card in
the MSR 214. If the customer agrees to a policy, the printer 212
prints a vinyl static-cling reminder sticker for the policyholder's
windshield. Additionally, the printer 212 prints two
proof-of-insurance cards on coated paper for the customer.
[0028] In some embodiments, the kiosk may include wireless (e.g.,
Bluetooth) capability to enable interaction with the customer's
cellular telephone. For example, during a payment step in the
purchasing process, the customer may elect to purchase the
insurance via the cell phone. Cell phones have unique identifier
numbers (e.g., an international mobile subscriber identify (IMSI)
number) that allows for their cellular network identification. This
number may also be used for unique identification for payment
transactions. A customer may, for example, purchase insurance and
have it added to their cell phone bill.
[0029] The use of a cell phone also enables a customer to transmit
electronic coupon offers to the kiosk. These coupon offers could be
part of a larger marketing campaign wherein the customer receives
insurance coupons/credits at participating businesses.
[0030] The use of a cell phone may also enable the customer to
conveniently transmit the phone number of a referrer (e.g., another
customer who has referred the current customer for the current
purchase). The phone number may then be used as a unique identifier
(UID) for a referral credit. For example, the customer may scroll
through their cell phone's address book looking for the name of the
person who referred them to the kiosk 202. Next to each address
entry may be a keypad option to select the phone registry entry as
"Referred me for insurance." If the user presses the cell phone
keypad item, the relevant phone number for the displayed address
entry is transmitted to the kiosk 202. The kiosk 202 may be
configured to acknowledge the receipt of the referrer number over
the network.
[0031] Referring now to FIG. 3 and with additional reference to
FIGS. 4-8, a method 300 illustrates a more detailed example of how
a customer may purchase a distance-based vehicle insurance policy
using an interactive system such as the system 200 of FIG. 2. In
the present example, the customer is a new customer who was
referred by an existing policyholder/customer.
[0032] In step 302 and with additional reference to screenshot 400
of FIG. 4, the customer approaches the kiosk 202 and enters his or
her driver's license by swiping it through the MSR 214 or entering
the number via the touch screen 208. The system 200 may use the
driver's license number to retrieve the customer's name, age,
address, driving record, registered vehicles, and similar
information. It may also be used for a limited criminal history
check. If the consumer is a returning customer, all of the previous
policy information may be loaded based upon the license number and
a confirmation key, and the consumer may then modify any existing
information and selections. In step 304, the customer enters the
license plate number of the vehicle he wants to insure. The license
plate number may be used to retrieve the vehicle identification
number (VIN), vehicle make, vehicle model, vehicle color, and
vehicle age. It may also be used to determine if differences exist
between the driver's license information and vehicle registration
information. The VIN may be used to check the vehicle history.
[0033] In step 306, the customer enters the current odometer
reading of the vehicle, which provides the starting point for
vehicle coverage (if a policy is purchased). In step 310, if there
are secondary drivers (as determined in step 308), the customer
enters the drivers' license numbers of the secondary drivers. As
with the customer's driver's license number, this information may
be used to retrieve the secondary drivers' names, ages, addresses,
driving records, and registered vehicles, as well as for a limited
criminal history check. In the present example, secondary drivers
listed with a registered address different than the primary
driver's (e.g., the customer) are not permitted.
[0034] In step 312 and with additional reference to screenshot 500
of FIG. 5, the customer chooses from three coverage lines (e.g.,
"Recommended," "Economy," and "Minimum") using a radio-button set.
In the present example, the three coverage choices improve
transaction speed and make the process more intuitive for the
consumer, as well as simplifying the management of risk-pools. It
is understood that more or fewer coverage choices may be used, and
that each coverage choice may be more or less complicated. In step
314, the customer may also select from additional coverage options
(e.g., "Collision," "Comprehensive," and "Roadside Assistance")
using checkboxes as illustrated in FIG. 5. These are coverages that
are not legally required, although some lienholders may require
them to secure the vehicle collateral. For both the coverage lines
and the coverage options, the cost per mile is illustrated to the
customer. The cost-per mile is based on the entered customer and
vehicle information and an actuarial rate class with which the
customer is matched by computer (e.g., the server 220 of FIG. 2).
The actuarial rate class is based solely on age, sex, location
(e.g., residence address or driving region), and vehicle type in
the present example, but it is understood that other factors may be
used.
[0035] In step 316 and with additional reference to screenshot 600
of FIG. 6, the customer is presented with an insurance quote in the
form <currency unit>/<distance unit>. I2 the present
example, the quote is for $0.056/mile, which is the summation of
the customer selected "Recommended" coverage line, and the
additional coverage options "Collision" and "Comprehensive" (as
priced in FIG. 5). The customer chooses the amount of insurance
coverage by selecting from a list of pre-calculated items. For
instance, the pre-calculated item in FIG. 6 offers $5000 miles of
insurance for $280 (at $0.056/mile). Additional menu items (not
shown, but selectable using the up/down arrows in FIG. 6) may be
provided for predefined increments up to a maximum available number
of miles (e.g., 1000 mile increments up to 25000 miles). This
approach allows consumers to see the cost savings relative to their
term-based insurance plans. It also allows them to see a direct
impact for reduced mileage in the future. The pre-calculation is
also very convenient and intuitive as a user interface.
[0036] In step 318 and with additional reference to screenshot 700
of FIG. 7, the customer is presented with a electronic payment
screen and may swipe his credit card in the MSR 214 or enter the
credit card information via the touch screen 208. This approach
provides not only payment information, but also provides a last
validation check for corroboration of the address/name information
from the driver's license with the credit card issuer's records.
Assuming a successful validation, immediate payment may be received
from the customer without having to incur the clearance/handling
costs of cash or personal checks.
[0037] In step 320, a determination is made as to whether the
customer was referred by an existing customer. If so, in step 322,
the customer enters a referral UID of the referring customer. The
referral UID is used to calculate the credit to the referrer, as
will be described later in greater detail.
[0038] In step 324 and with additional reference to FIG. 8, the
customer completes the financial transaction. Using the printer
212, two proof-of-insurance receipts are printed on paper
cardstock. The proof-of-insurance cards may also have a
confirmation key which can be used to speed future transactions by
loading existing policy data. Another printer may be used to print
a static-cling windshield reminder sticker (FIG. 11) on vinyl stock
simultaneously with the printing of the proof-of-insurance cards,
or the first printer may print the reminder sticker after printing
the proof-of-insurance cards. The customer may then collect the
printed items and end the session with the kiosk 202.
[0039] Referring now to FIG. 9, in another embodiment, a method 900
may be used to calculate a credit (e.g., additional miles) for an
existing customer (a referrer) who refers a new customer and credit
the referrer's account with the calculated amount. In steps 902 and
904, a customer's policy purchase request and payment information
are received as described previously in greater detail with respect
to FIG. 3. In step 906, the UID of the referrer is received and, in
step 908, the new customer's payment is processed. In step 910, the
referrer's UID is used to link the referrer's account with the new
customer's account.
[0040] In step 912, the credit that is to be added to the
referrer's account is calculated. In the present example, the
credit is a distance-denominated credit that provides additional
miles of insurance coverage on the referrer's existing policy. The
credit may be calculated using a formula such as: Number of Miles
Credited to Referrer's Policy=((A Percentage)*(Dollar value of new
customer purchase))/(Referrer's premium per mile). For example,
with a percentage of 0.02, a dollar value of $280 for the new
customer's purchase, and a premium per mile of $0.05 for the
referrer, the credit to the referrer's account will be 112 miles.
In the present embodiment, the credited amount is not redeemable
for cash and only new, first-time customer purchases will qualify
towards a referral credit. An existing customer, by referring
multiple new customers for first-time purchases, may receive
multiple, cumulative credits. In step 914, the referrer's account
is credited with the calculated amount of miles. In some
embodiments, the credit may be "reserved" for a previous customer
that no longer has a current policy. If the referrer once again
obtains a current policy, the credit may be applied to the account.
This may be used, for example, to both encourage referrals and to
encourage a previous customer to purchase another policy.
[0041] Referring now to FIG. 10, a method 1000 illustrates one
embodiment of a process for generating policy expiration/renewal
reminders. The method 1000 includes the use of collected odometer
readings, pricing multipliers, interactive reminders, and
static-cling windshield stickers. It is understood that not all of
these approaches may be used and that others may be added.
[0042] The purchase of distance-based insurance creates a contract
that is limited to a quantity of distance (e.g., "from the odometer
reading 5000 miles up to and including the odometer reading 7500
miles"). Accordingly, it may be desirable to remind policyholders
of approaching policy lapses to prevent them from accidentally
driving beyond their policy coverage. Additionally, many consumers
purchase a vehicle with the assistance of a lien, and the
lienholder often requires insurance coverage of the vehicle to
protect the collateral for the lien.
[0043] In step 1002 and with additional reference to FIG. 11, a
static-cling windshield sticker 1100 may be generated when a
customer purchases a distance-based insurance policy (as in step
324 of FIG. 3). As illustrated in FIG. 11, the sticker may include
such information as the beginning and ending odometer readings of
the insured vehicle, as well as a phone number at which information
regarding renewal may be obtained.
[0044] In addition to the window sticker, the customer may be sent
reminders based upon, for example, estimated distance traveled as
follows. In step 1004, a baseline is established by the customer's
starting odometer reading at the time of purchase. In step 1006,
the policy end date is estimated using the customer's average
vehicle distance traveled (e.g., miles) for a given unit of time.
For example, if a policy is for 12000 miles and the average driver
travels 1000 miles per month, the estimated policy lapse date is
twelve months from the date the policy was purchased. The estimated
rate may also be calculated using the ownership records. For
example, if the vehicle was purchased by the policyholder two years
ago with an odometer reading of 30000 miles and the current
odometer reading is 78000 miles, then the policyholder travels
approximately 2000 miles per month. In the absence of a more
accurate rate, a default rate may be applied.
[0045] In step 1008, the estimated lapse date is updated with any
harvested odometer readings, which may come from such sources as
vehicle emissions tests, vehicle maintenance, vehicle sales,
vehicle purchases, vehicle registrations, and vehicle accident
reports. Any odometer readings that are harvested enable a more
accurate travel rate to be estimated for the particular
customer.
[0046] In step 1012, if the policy end date is near (as determined
in step 1010), the customer is sent a reminder (e.g., a letter or
an electronic reminder such as an email or text message) of
impending lapse of the policy (e.g., as defined either by time or
by mileage). This reminder directs the customer to use a
communications device (e.g., a cell phone, pager, or personal
digital assistant) or to go to a website, kiosk, or other
interactive destination in order to enter their current odometer
reading. The entered odometer reading may be used in step 1014 to
further refine the predictive process for the rate of vehicle
travel and the associated lapse date. Over a period of time, the
method 1000 provides a more personalized rate of travel for each
policyholder. With fewer odometer readings, the notice may be sent
with a greater margin for error (e.g., more time until the policy
lapse). With more odometer readings and the corresponding fidelity,
the notice may be sent with a smaller margin of error (e.g., less
time until the policy lapse).
[0047] Referring to FIG. 12, a system 1200 illustrates one
embodiment of a system implementation for sending electronic
reminders to a customer via a cell phone. Various databases and
record readings from government sources 1202 (e.g., state records
and national government sources), private business records 1204,
and the owners' reported odometer readings 1206 are amalgamated
into a central data repository 1208 using vehicle identification
numbers (VINs) as the primary keys. Additionally, each recorded
odometer reading is associated with a date. A database 1210 of
policyholders, including their associated vehicles, is linked to
the database 1208 of odometer readings.
[0048] A server software process 1212 (e.g., software instructions
representing a process for estimating mileage to predict policy
lapses) operating on a server 1214 analyzes all odometer readings
associated with a policyholder's vehicle. When the process 1212
identifies an approaching policy expiration, it spawns a remote
server process 1216 to communicate with a policyholder. In the
present example, the remote server process 1216 sends a message to
the policyholder's cell phone 1220 over a standard cellular network
1218.
[0049] The policyholder's cell phone 1220 receives the message,
which is interpreted by a local software process 1222 (that may
have been previously installed by the policyholder). The cell phone
then presents a screen querying the policyholder and requesting
that the policyholder enter his vehicle's current odometer reading
using the phone keypad. When the policyholder enters the odometer
reading, the local software process 1222 either recommends an
immediate insurance renewal or recommends waiting.
[0050] If the local software process 1222 recommends a renewal, the
local software process opens a screen to purchase additional miles
of insurance coverage. The policyholder selects the quantity and
the method of purchase (e.g., via a credit card on file, or via
cell phone bill). If the local software process 1222 recommends
waiting, the local software process sends the odometer reading to
the remote software process 1216, which then passes the information
on in order to update the databases. In some embodiments, the local
software process 1222 may not query the policyholder if the
recommendation is to wait. Furthermore, in some embodiments, the
local software process 1222 may simply repeat a recommendation made
by the remote software process 1216.
[0051] It is understood that the system 1220 may be coupled to or
part of other systems, such as the system 200 of FIG. 2. For
example, the server 1214 may be the server 220 of FIG. 2, or may be
in communication with the server 220.
[0052] Referring now to FIG. 13, in another embodiment, a method
1300 may enable a policyholder to renew an expired policy by
retroactively pricing the coverage exposure from the point of
policy lapse to the point of a vehicle claim. Generally, there are
three parties concerned with possible coverage lapses: state
regulators, policyholders, and lienholders. Regulators need
policyholders to maintain coverage to meet legal requirements.
Lienholders need coverage to maintain protection of their
collateral (the vehicle). Policyholders need to maintain coverage
to comply with the law, possible lienholders, and to minimize
potential financial losses.
[0053] One problem of distance-based insurance is that
policyholders can drive beyond the odometer limit of their
vehicle's coverage, causing their policy to expire. The method 1300
may be used to address the likely usage patterns of policyholders
(as lapses will happen) and balance the uninterrupted coverage
needs of regulators, lienholders, and policyholders without
burdening the insurance product itself with financial or
operational baggage.
[0054] In step 1302, an insurance claim is received from a
policyholder. In step 1304, a determination is made as to whether
the policy against which the claim is being made has lapsed. For
example, an odometer reading included in the claim may be compared
to an expiration odometer value of the policy. If the policy has
not lapsed, the method continues to step 1312, where the claim is
processed.
[0055] If the policy has lapsed, the method continues to step 1306,
where a premium is calculated. While the policyholder is explicitly
covered for any claims/involvements that occur beyond the stated
odometer limit of their policy, the policyholder will be charged a
financial premium if the associated insurance policy is beyond the
stated odometer limit. Among other benefits, this premium
encourages the policyholder to keep their policy current by
aligning their financial interests with their risk interests.
[0056] The premium may be calculated as: Premium=((Current odometer
reading)-(Odometer limit for policy expiration))*((Policy
rate)*(Multiplier)). "Premium" is the price the policyholder will
be charged for the period of vehicle use between the expiration of
their policy and the odometer reading at the time of the
involvement/claim. "Current odometer reading" is the current
reading of the vehicle's odometer. "Odometer limit for policy
expiration" is the upper limit for the policy coverage (e.g., if
the policyholder purchased 5,000 miles of coverage with a starting
odometer reading of 90,000 miles, then the policy expires at 95,000
miles). "Policy rate" is the regular cost of coverage to the
policyholder for the given vehicle and coverage selections (e.g.,
$0.05/mile). "Multiplier" is a number that indicates how much the
premium will be over the normal rate.
[0057] Accordingly, if a claim is made on a lapsed policy, the
premium will be charged for the usage during the lapse. For
instance, if a policyholder's policy ends at 95,000 miles and the
policyholder has an involvement at 100,000 miles, the policyholder
may still elect to make a claim. If a claim is made, he must pay
for the implicit insurance consumed from 95,000 miles to 100,000
miles, a total of 5,000 miles. These 5,000 miles of coverage will
cost him a multiple of his usual rate. For instance, if his usual
rate is $0.05/mile, he must pay $0.25/mile (with a multiplier of
five). Therefore, he must pay $1,250 (instead of the $250 cost at
the usual rate).
[0058] In step 1308, a determination is made as to whether the
policyholder wants to renew the policy. The premium may be
displayed to the policyholder at this time or, in other
embodiments, the policyholder may simply be given the choice of
renewal and notified that a premium will be charged per a defined
policy that is provided to the policyholder. If the policyholder
does not want to renew the policy, the method 1300 ends. If the
policyholder does want to renew the policy, payment from the
policyholder may be accepted in step 1310 and the claim may be
processed in step 1312. Accordingly, the method 1300 may provide
"retroactive coverage" for distance-based insurance to be
maintained at all times. Furthermore, the premium may encourage
policyholders to keep their policies current through renewal,
extension, or larger initial purchases.
[0059] Referring to FIGS. 14 and 15, in other embodiments, it is
understood that variations of a distance-based insurance policy may
be used. For example, three possible distance-based policy contract
types include a pure distance-based policy, a hybrid policy, and an
adjusted term policy. The pure distance-based policy (a portion of
which is shown in FIG. 14) bases the policy beginning and ending
solely on odometer readings. The policy is only valid while the
vehicle's odometer reading is within the stated value range. The
hybrid policy type combines term-based comprehensive coverage with
distance-based liability/collision coverage. The comprehensive
portion is delimited by two dates to create a term policy. The
liability/collision portion is delimited by two odometer readings
to create a distance policy. The adjusted term policy type (a
portion of which is shown in FIG. 15) provides for a term with
annual credits/debits for actual usage (e.g., based on mileage).
The credit/debit is based upon the harvested odometer readings. If
the customer is under the stated mileage at the end of the term, he
will receive a credit for the unused miles at the policy rate. If
the customer is over the mileage, he will pay a debit for the
overage at the policy rate.
[0060] It is understood that, while the above embodiments do not
rely on odometer audits or verification, various steps may be
implemented to protect against fraud using, for example, candidate
screening at the time of purchase, odometer record audits at the
time of a claim, and/or national claim screening at the time of a
claim. Some or all of these approaches may be implemented in the
examples described above, including the system 200.
[0061] Using candidate screening at the time of purchase (e.g.,
driver's license number, license plate number, and credit card), an
insurance company may gather many pieces of corroborating
information regarding an applicant for a policy. By cross-checking
information with vehicle registration and ownership records,
criminal records, registered addresses, claims databases, etc.,
discrepancies or other "flags" may be identified that may prevent a
policy from issuing to a customer. In some embodiments, such a flag
may result in a request for the potential customer to contact the
insurance company, or may result in a notification to the insurance
company that customer support should contact the potential
customer.
[0062] Using odometer record audits at the time of a claim may
include checks with public and private databases (vehicle
registration, emission inspections, oil services, owner statements,
etc.). For example, if the involved vehicle has been in an
accident, the reporting police officer will provide an odometer
reading; if the involved vehicle is sent to a repair shop, the
latter will provide an odometer reading. A suspect odometer history
may result in a claim being denied or investigated.
[0063] National claim screening at the time of a claim may be used
in place of or in addition to candidate/claim screening at the
point-of-sale. For example, an insurance company may screen all
claim requests against fraud discovery and prevention database
services from companies providing such information.
[0064] While the preceding description shows and describes one or
more embodiments, it will be understood by those skilled in the art
that various changes in form and detail may be made therein without
departing from the spirit and scope of the present disclosure. For
example, various steps of the described methods may be executed in
a different order or executed sequentially, combined, further
divided, replaced with alternate steps, or removed entirely. In
addition, various functions illustrated in the methods or described
elsewhere in the disclosure may be combined to provide additional
and/or alternate functions. As described, some or all of the steps
of each method may be implemented in the form of computer
executable software instructions. Furthermore, the instructions may
be located on a server that is accessible to many different
clients, may be located on a single computer that is available to a
user, or may be located at different locations. Therefore, the
claims should be interpreted in a broad manner, consistent with the
present disclosure.
[0065] Thus, the present invention is well adapted to carry out the
objectives and attain the ends and advantages mentioned above as
well as those inherent therein. While presently preferred
embodiments have been described for purposes of this disclosure,
numerous changes and modifications will be apparent to those of
ordinary skill in the art. Such changes and modifications are
encompassed within the spirit of this invention as defined by the
claims.
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