Computer-Based System and Method for Calculating an Estimated Risk Premium

A computer-based system for calculating an estimated risk premium for reinsurance of a cedent's insurance policies covering loss event related fatalities and disabilities, comprising:

• means for storing for a first type of market scenario, representative of a relatively small, first type of loss event for a defined insurance market, a frequency of the first type of loss event and a number of insured individuals involved in the first type of loss event;
• means for storing for a second type of market scenario, representative of a relatively big, second type of loss event for the market, a frequency of the second type of loss event and a number of insured individuals involved in the second type of loss event;
• means for calculating a first individual scenario, indicative of the cedent's exposure to the first type of loss event, based on the first type of market scenario;
• means for calculating a second individual scenario, indicative of the cedent's exposure to the second type of loss event, based on the second type of market scenario;
• means for calculating a first set of loss event frequencies by number of individuals insured by the cedent and involved in a loss event, using a standard distribution for the number of insured individuals involved in the loss event and using the first individual scenario and the second individual scenario as interpolation points;
• and
• means for calculating the estimated risk premium from the first set of loss event frequencies and from severity data.

A computer implemented method to calculate an estimated risk premium for reinsurance of a cedent's insurance policies covering loss event related fatalities and disabilities, comprising:

• storing for a first type of market scenario, representative of a relatively small, first type of loss event for a defined insurance market, a frequency of the first type of loss event and a number of insured individuals involved in the first type of loss event;
• storing for a second type of market scenario, representative of a relatively big, second type of loss event for the market, a frequency of the second of loss event and a number of insured individual involved in the second type of loss event;
• calculating a first individual scenario, indicative of the cedent's exposure to the first type of loss event, based on the first type of market scenario;
• calculating a second individual scenario, indicative of the cedent's exposure to the second type of loss event, based on the second type of market scenario;
• calculating a first set of loss event frequencies by number of individuals insured by the cedent and involved in a loss event, using a standard distribution for the number of insured individuals involved in the loss event and using the first individual scenario and the second individual scenario as interpolation points;
• and
• calculating the estimated risk premium from the first set of loss event frequencies and from severity data.

A computer program product comprising a computer readable medium containing therein computer program code for controlling one or more processors of a computer, such that the computer:

• stores for a first type of market scenario, representative of a relatively small, first type of loss event for a defined insurance market, a frequency of the first type of loss event and a number of insured individuals involved in the first type of loss event;
• stores for a second type of market scenario, representative of a relatively big, second type of loss event for the market, a frequency of the second type of loss event and a number of insured individuals involved in the second type of loss event;
• calculates a first individual scenario, indicative of a cedent's exposure to the first type of loss event, based on the first type of market scenario;
• calculates a second individual scenario, indicative of the cedent's exposure to the second type of loss event, based on the second type of market scenario;
• calculates a set of loss event frequencies by number of individuals insured by the cedent and involved in a loss event, using a standard distribution for the number of insured individuals involved in the loss event and using the first individual scenario and the second individual scenario as interpolation points;
• and
• calculates from the set of loss event frequencies and from severity data an estimated risk premium for reinsurance of insurance policies of the cedent covering loss event related fatalities and disabilities.