IL136322A - Method and system for computing automobile insurance - Google Patents

Abstract

A method for computing automobile insurance premiums, the method comprising the steps of: (a) gathering data pertaining to at least one driving parameter and storing said data in a data collection device located within a vehicle; (b) using said data to compute an insurance premium for said vehicle; and (c) transmitting said data to an insurance underwriting concern concurrent with credit card sales of fuel for said vehicle. פירוט זה נבחן בהתאם לתקנה 35 לתקנות הפטנטים, תשכ" ח-1968 This specification was examined in accordance with regulation 35 of the Patent Regulations, 5728-1968. 1446 כ" ג בסיון התשס" א - June 14, 2001

Description

IMPROVED METHOD AND SYSTEM FOR COMPUTING AUTOMOBILE INSURANCE APPLICATION FOR PATENT Inventor(s): Shai Hershcovich and Hayim Kohen IMPROVED METHOD AND SYSTEM FOR COMPUTING AUTOMOBILE INSURANCE PREMIUMS FIELD AND BACKGROUND OF THE INVENTION The present invention relates to an improved method and system for computing automobile insurance premiums and, more particularly, to a method which measures actual risk incurred by specific drivers operating specific vehicles.

The insurance industry has traditionally relied upon actuarial tables as a means of computing premiums. Actuarial tables are compilations of data predicting risk for a large population of people with one or more attributes in common. As a result, predictions of the likelihood of having to bay benefits on policies based on actuarial tables will be correct in general but may be incorrect for certain individuals.

Roughly half of these individuals that do not perform as predicted by the actuarial table will present an above average risk and tend to cause premiums to be increased for all policyholders.

On the other hand, the other half of these individuals that do not perform as predicted by the actuarial table will present a below average risk and tend to cause premiums to be decreased for all policy holders.

However, because all policyholders pay premiums based on the actuarial table, those with an above average risk (within their actuarial group) are not penalized, and those with a below average risk (within their actuarial group) are not rewarded..

In the case of life insurance, data on individuals is often gathered in addition to actuarial data. This individual data most often takes the form of a physical examination at the time of initial underwriting.

In the case of automobile insurance, individual data collection is typically more limited, and reliance on actuarial data is greater. This means that people in certain actuarial groups, for example unmarried males under age 21, invariably pay high premiums. This is regardless of their actual driving habits which may be excellent in some cases.

Existing devices allow gathering of data regarding various driving parameters for specific drivers or vehicles including distance traveled and driving speed ( e.g. fuelomat and TRIPlog; ORPAK Industries Ltd., Bnei Brak, Israel). However, this data has not previously been used to compute Insurance premiums.

There is thus a widely recognized need for, and it would be highly advantageous to have, a method and system for computing automobile insurance premiums devoid of the above limitation.

SUMMARY OF THE INVENTION According to one aspect of the present invention there is provided a method for computing automobile insurance premiums. The method comprises the steps of (a) gathering data pertaining to at least one driving parameter and storing the data in a data collection device located within a vehicle and using the data to compute an insurance premium for the vehicle.

According to another aspect of the present invention there is provided a system for computing automobile insurance premiums. The system comprises (a) a plurality of data collection devices located within a plurality of vehicles, the devices designed and configured for gathering and storing data pertaining to at least one driving parameter and (b) a computer receiving the data from at least a portion of the plurality of devices and using the data to compute insurance premiums for the vehicles.

According to yet another aspect of the present invention there is provided a method for computing a fee for the use of a vehicle, the method comprising the steps of (a) gathering data pertaining to at least one driving parameter and storing the data in a data collection device located within the According to further features in preferred embodiments of the invention described below, the method comprises the additional step of transmitting the data to an insurance underwriting concern.

According to still further features in the described preferred embodiments the method comprises the additional step of installing the data collection device in the vehicle..

According to still further features in the described preferred embodiments the at least one driving parameter is selected from the group consisting of a velocity of the vehicle, an acceleration of the vehicle, a time at which travel occurs, a location of the vehicle, GPS data, information pertaining to a distance traveled (e.g. odometer reading), information pertaining to idle time, information pertaining to engine hours, information pertaining to mechanical function of the vehicle, a number of engine starts, a number of accelerations from zero velocity, information pertaining to cornering and identification information pertaining to a driver of the vehicle.

According to still further features in the described preferred embodiments the step of transmitting the data involves the use of at least one intermediary device.

According to still further features in the described preferred embodiments at least one intermediary device is involved in relay of the data from the at least a portion of the plurality of devices to the computer.

According to still further features in the described preferred embodiments the at least one intermediary device is selected from the group consisting of a data collection device located in a fuel station, at least a portion of a cellular telephone and a computer of a financial clearinghouse.

According to still further features in the described preferred embodiments the method includes the additional step of debiting an account in the amount of the insurance premium.

According to still further features in the described preferred embodiments the step of transmitting the data involves the use of equipment used to transmit billing information from credit card sales of fuel for the vehicle..

According to still further features in the described preferred embodiments the method comprises the additional sub-step of separately gathering data for at least two drivers of the vehicle.

According to still further features in the described preferred embodiments the system further comprises driver identification devices, the driver identification devices being designed and configured to facilitate separately gathering data for individual drivers operating each of the plurality of vehicles.

According to still further features in the described preferred embodiments the vehicle is of a type selected from the group consisting of a privately owned vehicle, a rented vehicle, a leased vehicle and a commercially operated vehicle.

According to still further features in the described preferred embodiments the method comprises the additional step of transmitting the data to a fee collecting entity.

According to still further features in the described preferred embodiments the method comprises the additional step of installing the data collection device in the vehicle.

According to still further features in the described preferred embodiments the computer is designed and configured to debit an account in the amount of the insurance premium.

The present invention successfully addresses the shortcomings of the presently known configurations by providing a method and system for computing automobile insurance premiums based on actual risk exposure of the vehicle.

BRIEF DESCRIPTION OF THE DRAWINGS The invention is herein described, by way of example only, with reference to the accompanying drawings. With specific reference now to the drawings in detail, it is stressed that the particulars shown are by way of example and for purposes of illustrative discussion of the preferred embodiments of the present invention only, and are presented in the cause of providing what is believed to be the most useful and readily understood description of the principles and conceptual aspects of the invention. In this regard, no attempt is made to show structural details of the invention in more detail than is necessary for a fundamental understanding of the invention, the description taken with the drawings making apparent to those skilled in the art how the several forms of the invention may be embodied in practice.

In the drawings: FIG. 1 is a flow diagram of a sequence of events according to the present invention.

DESCRIPTION OF THE PREFERRED EMBODIMENTS The present invention is of a method and system for computing automobile insurance premiums which can be used to base premiums upon actual risk.

Specifically, the present invention can be used to collect data pertaining to at least one driving parameter of a vehicle and to calculate the insurance premium for that vehicle based upon the collected data.

The principles and operation of a method and system for computing automobile insurance premiums according to the present invention may be better understood with reference to the drawings and accompanying descriptions.

Before explaining at least one embodiment of the invention in detail, it is to be understood that the invention is not limited in its application to the details of construction and the arrangement of the components set forth in the following description or illustrated in the drawings. The invention is capable of other embodiments or of being practiced or carried out in various ways. Also, it is to be understood that the phraseology and terminology employed herein is for the purpose of description and should not be regarded as limiting.

Referring now to the drawings, Figure 1 illustrates a sequence of events according to the method of the present invention. According to one aspect of the present invention there is provided a method for computing automobile insurance premiums. The method 20 includes the step of gathering data 24 pertaining to at least one driving parameter and the step of storing the data in a data collection device located within a vehicle and using the data to compute 28 an insurance premium for the vehicle.

For purposes of this specification and the accompanying claims the terms "storing" and "stored" refer to any residency within the data collection device, even if that residency is of the shortest possible duration and even if that duration is below the threshold of detection of the most sensitive time measurement device available. As such, data collection devices which constantly broadcast or instantaneously transmit collected data are specifically included within the definition.

For purposes of this specification and the accompanying claims, the term "premium" includes, but is not limited to, an amount of money charged for insurance coverage, a level of a deductible from an insurance claim, a limit of liability for an insurance underwriting concern and a right to be insured.

As an illustrative example, an insured vehicle implementing method of the present invention is involved in single car accident on a road with a series of sharp curves identified by warning signs and with a posted speed limit of 25 MPH. The insurance underwriting concern is able to establish that the actual speed of the insured vehicle at the time of the accident and for the 60 seconds preceding the accident was 29 MPH. This fact activates a clause in the relevant insurance policy which states that "...in cases where a driver of the insured vehicle is driving with excessive speed at the time of an accident, the level of the dectible will be increased from $500 to $2500. As an additional illustrative example, two insured vehicles implementing method 20 of the present invention are involved in a collision on a highway. The first vehicle suffers a rear end impact from the second vehicle. A driver of the second vehicle claims that he is not at fault because the first vehicle changed lanes without signaling and reduced speed suddenly. Gathered data from the two vehicles shows that the first vehicle was traveling at 70 MPH, cornered sharply, did not engage the directional signal, and was decelerating rapidly at the time of impact and that the second vehichle was travleling at 57 MPH with cruise control engage for the 15 minutes preceding the accident. This data is used to substantiate the claim of the driver of the second vehicle. As a result a citation for reckless driving which was issued by a highway patrolman at the scene of the accident is dismissed from court and insurance premiums for the secondvehicle are not increased.

The at least one driving parameter may be, for example, a velocity of the vehicle, an acceleration of the vehicle, a time at which travel occurs, a location of the vehicle, GPS data, information pertaining to a distance traveled (e.g. odometer reading), information pertaining to idle time, information pertaining to engine hours, information pertaining to mechanical function of the vehicle, a number of engine starts, a number of accelerations from zero velocity, information pertaining to cornering and identification information pertaining to a driver of the vehicle. For purposes of this specification and the accompanying claims, the phrase "information pertaining to mechanical function of said vehicle" refers to any and all data describing a physical condition of the vehicle or any portion thereof. This definition includes, but is not limited to, information pertaining to motor speed in R.P.M. (revolutions per minute) engine temperature, engine oil pressure, pressure in a hydraulic system (e.g. oil pressure or air pressure), a level of a fluid in a reservoir (e.g. brake fluid level, transmission fluid level, coolant fluid level), battery charge, brake temperature, load weight and tire air pressure.

Method 20 may additionally include the step of transmitting 26 the data to an insurance underwriting concern. This transmission may occur via any channel of communication wherein "channel of communication" is defined, for purposes of this specification and the accompanying claims to include a telephone connection, a cellular telephone connection, an Internet connection, an infrared frequency transmission connection, a local area network connection, a radio frequency connection, a fiber-optic connection, a connection by a wire and any other means of transmitting data. Inherent in the idea of a communication channel is an open status during which data transmission may occur. In some cases, communication channels may also have a closed status during which no data transmission may occur.

The step of transmitting the data 26 to an insurance underwriting concern, may, in some cases, involves the use of at least one intermediary device 32. According to preferred embodiments of the present invention, method 20 further includes the additional step of installing 22 the data collection device in the vehicle. Intermediary device 22 may be, for example, a data collection device located in a fuel station or at least a portion of a cellular telephone or a computer of a financial clearinghouse. If intermediary device 22 is a cellular telephone or a portion thereof, the step of transmitting the data 26 may involve, for example, the use of an SMS broadcast via a cellular telephone network. Alternately or additionally, the step of transmitting the data 26 may involve the use of equipment used to transmit billing information from credit card sales of fuel for the vehicle.

Method 20 may additionally include the step of debiting an account in the amount of the insurance premium. For purposes of this specification and the accompanying claims the tenn "account" refers to any calculation of monetary indebtedness. This definition specifically includes, but is not limited to, a credit card account, a bank account and a customer account with a commercial entity (e.g. insurance underwriting concern).

According to preferred embodiments of the present invention the method includes the additional sub-step of separately gathering data 24 for at least two drivers of the vehicle. This may be accomplished for example by the use of electronic keys, magnetic cards, PIN codes or other identification means which are commercially available. One ordinarily skilled in the art will be capable of integrating such identification means into the method of the present invention.

According to preferred embodiments of the present invention there is provided a system for computing automobile insurance premiums. The system includes a plurality of data collection devices located within a plurality of vehicles. The devices are designed and configured for gathering and storing data pertaining to at least one driving parameter. The system also includes a computer 28 for receiving the data from at least a portion of the plurality of devices and using the data to compute insurance premiums for the vehicles. In some cases, one or more intermediary devices 32 are involved in relay of the data from the at least a portion of the plurality of devices to the computer 28. The system may further include driver identification devices (as described hereinabove), the driver identification devices being designed and configured to facilitate separately gathering data for individual drivers operating each of the plurality of vehicles. According preferred embodiments of the present invention the computer is designed and configured to debit an account in the amount of the insurance premium.

According to preferred embodiments of the present invention there is provided a method for computing a fee for the use of a vehicle. The method includes the steps of 24 gathering data pertaining to at least one driving parameter and storing the data in a data collection device located within the vehicle and the step of using the data to compute the fee for the use of the vehicle. The method may further include the step of transmitting the data to a fee collecting entity. Alternately or additionally, the method may include the step of installing the data collection device in the vehicle.

For purposes of this specification and the accompanying claims, the phrase "a fee for the use of a vehicle" may include a variety of charges. One example of such charges is a rental fee. Another example is an insurance premium for a rental vehicle. Further included is a fee for the use by an individual of a vehicle, provided for work by a party other than the individual, for personal matters. A right to operate the vehicle is specifically included within "a fee for the use of a vehicle.

With respect to both disclosed methods and the disclosed system, the vehicle may be, for example, a privately owned vehicle, a rented vehicle, a leased vehicle or a commercially operated vehicle.

As an illustrative example of how the system and method of the present invention might be used to benefit both insurance underwriting entities and insured drivers, consider the hypothetical example of Mr. Young and Ms. Elder. Mr. Young is a 17 year old male driving an 8 year old mid-size sedan. Ms Elder is a 41 year old married mother of three children driving a sport utility vehicle of the current model year. Both drivers live and work in the same town.

According to conventional methods of computing insurance premiums, Mr. Young might expect to pay $200 per month for minimum coverage as mandated by law in the state where he resides. Ms. Elder might expect to pay $85 per month for coverage with limits that are five times higher than those of Mr. Young. This discrepancy is due to actuarial data which shows that, in general, young unmarried males are far more likely to be involved in automobile accidents than more mature married females, especially if the married females have children.

According to the method and system of the present invention, Mr.

Young and Ms. Elder agree to the use of data collection devices in their vehicles to monitor at least one driving parameter. For the sake of this example the driving parameters monitored are a velocity of the vehicle, an acceleration of the vehicle, a time at which travel occurs and information pertaining to cornering.

Collected data reveals that Mr. Young travels primarily at 35 MPH and occasionally at 60 MPH which correspond to speed limits on local roads and highways in the area in which he resides. Mr. Young's acceleration values are low; he travels primarily during daylight hours and corners slowly.

Corresponding data for Ms. Elder reveal that she travels primarily at 47 MPH and frequently at speeds in excess of 75 MPH. These speeds suggest that she exceeds the speed limit on both local roads and highways. In addition, it is discovered that Ms. Elder frequently starts her car at 2:45 AM, which corresponds to the hour at which establishments serving alcoholic beverages are legally mandated to close their doors in her locality. Data on acceleration and cornering performance suggest that she may often be intoxicated while driving, especially late at night.

As a result of data collected using the method and system of the present invention, Mr. Young can expect a significant reduction in premiums. Ms. Elder will probably be asked to pay increased premiums.

These increased premiums may cause her to modify her driving habits. Since premiums according to the present invention may be computed, for example, monthly, Ms. Elder will be rewarded for an improvement in driving habits. Similarly, Mr. Young may expect to be penalized with high premiums if he drives recklessly even if he is not involved in an accident or issued a citation by a law enforcement agency.

Although the invention has been described in conjunction with specific embodiments thereof, it is evident that many alternatives, modifications and variations will be apparent to those skilled in the art. Accordingly, it is intended to embrace all such alternatives, modifications and variations that fall within the spirit and broad scope of the appended claims.

Claims (19)

1 1 136322/2 WHAT IS CLAIMED IS:

1. A method for computing automobile insurance premiums, the method comprising the steps of: (a) gathering data pertaining to at least one driving parameter and storing said data in a data collection device located within a vehicle; (b) using said data to compute an insurance premium for said vehicle; and (c) transmitting said data to an insurance underwriting concern concurrent with credit card sales of fuel for said vehicle.

2. The method of claim 1, comprising the additional step of installing said data collection device in said vehicle..

3. The method of claim 1, wherein said at least one driving parameter is selected from the group consisting of a velocity of said vehicle, an acceleration of said vehicle, a time at which travel occurs, a location of said vehicle, GPS data, information pertaining to a distance traveled, information pertaining to idle time, information pertaining to engine hours, information pertaining to mechanical function of said vehicle, a number of engine starts, a number of accelerations from zero velocity, information pertaining to cornering, and identification information pertaining to a driver of said vehicle.

4. The method of claim 1, wherein said step of transmitting said data involves the use of at least one intermediary device.

5. The method of claim 4, wherein said at least one intermediary device is selected from the group consisting of a data collection device located in a fuel station, and a computer of a financial clearinghouse.

6. The method of claim 1, comprising the additional step of: (c) debiting an account in the amount of said insurance premium.

7. The method of claim 1, wherein said step of transmitting said data involves the use of equipment used to transmit billing information from credit card sales of fuel for said vehicle. 12 136322/2

8. The method of claim 1, comprising the additional sub-step of separately gathering data for at least two drivers of said vehicle.

9. The method of claim 1, wherein said vehicle is of a type selected from the group consisting of a privately owned vehicle, a rented vehicle, a leased vehicle and a commercially operated vehicle.

10. A system for computing automobile insurance premiums, the system comprising: (a) a plurality of data collection devices located within a plurality of vehicles, said devices designed and configured for gathering and storing data pertaining to at least one driving parameter; (b) a computer receiving said data from at least a portion of said plurality of devices and using said data to compute insurance premiums for said vehicles; wherein said computer receives said data from said plurality of vehicles concurrent with credit card sales of fuel for said plurality of vehicles.

11. 1 1. The system of claim 10, wherein said at least one driving parameter is selected from the group consisting of a velocity of said vehicle, an acceleration of said vehicle, a time at which travel occurs, a location of said vehicle, GPS data, information pertaining to a distance traveled, information pertaining to idle time, information pertaining to engine hours, information pertaining to mechanical function of said vehicle, a number of engine starts, a number of accelerations from zero velocity, information pertaining to cornering and identification information pertaining to a driver of said vehicle.

12. The system of claim 10, wherein at least one intermediary device is involved in relay of said data from said at least a portion of said plurality of devices to said computer.

13. The system of claim 12, wherein said at least one intermediary device is selected from the group consisting of a data collection device located in a fuel station, and at least one additional computer. 13 136322/2

14. The system of claim 10, wherein said computer is designed and configured to debit an account in the amount of said insurance premium.

15. The system of claim 10, wherein said data is transmitted to said computer by equipment used to transmit billing information from credit card sales of fuel for said vehicle.

16. The system of claim 10, further comprising driver identification devices, said driver identification devices being designed and configured to facilitate separately gathering data for individual drivers operating each of said plurality of vehicles.

17. The system of claim 10, wherein said plurality of vehicles includes vehicles of a type selected from the group consisting of a privately owned vehicle, a rented vehicle, a leased vehicle and a commercially operated vehicle.

18. A method for computing a fee for the use of a vehicle, the method comprising the steps of : (a) gathering data pertaining to at least one driving parameter and storing said data in a data collection device located within the vehicle; (b) using said data to compute the fee for the use of the vehicle; and (c) transmitting said data to a fee collecting entity concurrent with credit card sales of fuel for the vehicle.

19. The method of claim 18, comprising the additional step of installing said data collection device in the vehicle. RK FRIEDMAN LTD £,Τ ΑΤΤΟ Κ Ν ΕΥ¾ ELOFF B UI LDI NG 667788He97C¾ TEL,A-NA,VMIV " ITSRRAEEEL?