Crime Rating With Insbridge
A crime insurance policy is designed to meet the needs of organizations other than financial institutions (such as banks). A commercial crime policy typically provides several different types of crime coverage, such as: employee dishonesty coverage; forgery or alteration coverage; computer fraud coverage; funds transfer fraud coverage; kidnap, ransom, or extortion coverage; money and securities coverage; and money orders and counterfeit money coverage.
Second Phase was hired by an Insurance Carrier to gather the requirements, design and implement the rating of a Crime product into Oracle Insurance Insbridge Enterprise Rating (Insbridge). The following level of requirements were given by the carrier:
• Need to produce Actual Premium, Term Premium, Commission, and Net Premium for all base and additional Coverages.
• Need to produce additional Taxes and Surcharges by State
• Need to be able to support Schedule Rating and generate the impact of schedule rating.
• Need to be able to support versioning of logic and rates.
Second Phase decided to go with the following category structure:
As we know, the Category structure is extremely important in Insbridge as it determines relationships between rating objects and can dramatically effect rating performance as well as program maintenance. A category structure simple enough as the one shown above could run efficiently and would be easier to maintain.
The coverage and Sub Coverage categories were used for both the base coverages and additional coverages. An additional coverage indicator was used to sum up the total base coverage premium and additional coverage premium. The Sub Coverage Category which was the lowest category and the more granular was only used for specific coverages that needed to generate sub coverage premiums which would then be rolled up at the coverage level.
Since the rating solution needed to produce Actual Premium, Term Premium, Commission, and Net Premium for all Coverages, we had to determine if we needed to build separate Insbridge programs for these. After a detailed review of each type of premium, it was determined that each Premium could be calculated by simply applying a few additional factors to the actual Premium. As such, it was determined it was best to include the premiums for all three in one rating program. We built separate algorithms for Actual Premium, Term Premium, Commission, and Net Premium.