Patent Issued for Adaptive coupling-system based on a flexible risk transfer structure and corresponding method thereof (USPTO 11315188): Swiss Reinsurance Company Ltd.
2022 MAY 13 (NewsRx) -- By a
The patent’s assignee for patent number 11315188 is
News editors obtained the following quote from the background information supplied by the inventors: “Risk transfer has been used for a long time in the state of the art as a technical tool to manage the risk of uncertain losses, in particular to keep up operation of functional, technical or business units. These days, significant risk exposure is associated with many aspects in the life and non-life sectors. Risk exposed units, such as any kinds of objects, individuals, corporate bodies and/or legal entities, are necessarily confronted with many forms of active and passive risk management to hedge and protect against the risk of certain losses and events. The prior art addresses such risk of loss, for example, based on transferring and pooling the risk of loss from a plurality of risk exposed entities to a dedicated pooling entity. In essence, this can be executed by effectively allocating the risk of loss to this pooling unit or entity in that resources of associated units, which are exposed to a certain risk, are pooled. If one of the units is hit by an event that is linked to a transferred risk, the pooling entity directly intercepts the loss or damage caused by the event by transferring resources from the pooled resources to the affected unit. Pooling of resources can be achieved by exchanging predefined amounts of resources with the resource-pooling system; e.g., payments or premiums that are to be paid for the transfer of the risk. This means that predefined resource amounts are exchanged for the other unit thereby assuming the risk of loss.
“As described above, insurance systems use resource-pooling systems to pool the resources and risks of associated risk exposed components. However, to avoid operational instabilities, often such resource pooling systems of on insurance system are coupled to one or more other resource pooling systems in order to redistribute parts of their pooled risks. Correspondingly, a loss that is to be covered can be segmented by those coupled insurance systems, wherein for switching from one insurance system to another insurance system, an optimal risk transfer structure has to be provided by the systems. The issue of providing optimal reinsurance solutions is a classical problem of insurance systems, since the appropriate use of coupled secondary resource pooling systems, as, e.g., reinsurance systems, is often an effective risk management tool for managing and mitigating the risk exposure of a primary system and for guaranteeing operational stability and operational best mode practices for a minimal pooling of necessary resources. However, the related effectiveness depends on the choice of the most optimized risk transfer structure. Typically, the technical problem of optimally coupling insurance systems can be defined as an issue of optimization; meaning the goal is minimizing the total risk exposure of an insurance system under different boundary criteria, such as, e.g., criteria of value at risk or conditional value at risk, i.e. by finding the optimal balance between the benefit (reducing the risk by purchasing reinsurance shares) and the cost (premiums) of the redistributed insurance risk shares. Therefore, the object of the present invention addresses the technical problem of coupling two resource pooling systems with the goal of pooling the risk exposure of associated components and in seeking better and more effective technical implementations on the basis of an appropriate risk transfer structure.
“The prior art specifies a plurality of systems addressing the above-mentioned problem. For example, US 2004/0236698 A1 describes a system for automated risk management trade between two coupled systems: in particular, a insurance and a reinsurance system. This system provides for the transfer of premiums and loss payments directly between the risk-pooling systems. Further, the system allows for interactions between the two coupled systems, which allows for decision-making functions concerning reinsurance products. However, US 2004/0236698 A1 does not describe how a loss transfer structure should be designed for a specific insurance system, or how the insurance system should optimize its own risk exposure for the process of determining the mitigation of its own risk. Another example of the known prior art in the field of automated risk transfer systems is US 2011/0112870 A1. US 2011/0112870 A1 discloses a system for determining a percentage for assigning, i.e., transfer-related risk in an insurance pool, wherein the transferred risks are shared via a secondary resource pooling system that is based on predefined transfer-specific conditions of a reinsurance contract. The system mainly allows for automatically providing information as to losses, which is transferred to the captive resource pooling system in insurer’s system and reinsurer’s system. However, US 2011/0112870 A1 does not disclose a general method for determining the amount of the actual risk transfer. Still another example of a prior art patent in the field of optimal risk transfer strategies is
“In summary, in the prior art, existing systems, which operation are at least partially based on risk transfer schemes or structures come in many different forms, wherein they often have very different objectives and operational approaches. However, typically, the range of schemes or structures of the prior art systems are specific to one particular locality, sector or country, supporting the view that there is no ‘one-size-fits-all’ solution in the prior art. Furthermore, the optimization of the prior art systems is restricted to their structure, upon which they are based on, i.e. either by a proportional or nor-proportional approach. Therefore, the optimizations of the prior art systems are technically bound to their chosen risk transfer structure, as proportional or non-proportional. So, the prior art systems do technically not allow a flexible, completely problem-specific adapted optimization by means of determining an appropriately adapted risk transfer function, moreover not by a dynamically or semi-dynamically self-adapted risk transfer structure by means of the systems. Starting form the prior art systems, constructing and assessing the effectiveness and sustainability of a risk transfer structure, particularly in the context of adaptation of complementary coupled systems, is a technical challenge. This goes beyond pure economic cost-benefit analysis, and it needs to include the recognition of the different optimization objectives such as vulnerability reduction, commercial viability, affordability, and the financial sustainability of a scheme in the context of changing risk levels due to optimizing risk transfer structures, but is a technical challenge on the construction an technical basis of such systems, themselves.”
As a supplement to the background information on this patent, NewsRx correspondents also obtained the inventors’ summary information for this patent: “It is one object of the present invention to provide a system and method for sharing the risk of risk events of a variable number of risk exposure components by providing dynamic, self-sufficient risk protection for the risk exposure components; this is achieved by means of a primary resource-pooling system, which is stabilized and optimized by an appropriate partial risk transfer to at least one secondary resource and risk pooling system using an optimized risk transfer structure. In particular, the system provides an automated switching mechanism between the two coupled systems and offers a measure for the optimization of the systems. A further object of the invention seeks to provide a way to technically capture, handle and automate complex, related risk transfer structures and switching operations of the insurance industry that are related to optimally shared risks and transfer operations. Another object of the invention seeks to synchronize and adjust such operations based on technical means. In contrast to standard practice, the resource-pooling systems creates a reproducible operation with the desired, technically based, repetitious accuracy that relies on technical means, process flow and process control/operation.
“According to the present invention, these objects are achieved, particularly, with the features of the independent claims. In addition, further advantageous embodiments can be derived from the dependent claims and the related descriptions.
“According to the present invention, the above-mentioned objects for complementary switching of two coupled, autonomously operated insurance systems that are provided for the purpose of self-sufficient risk protection of a variable number of risk exposure components are achieved, particularly, in that a system is envisioned that includes an event-triggered switching device; and said switching device operates with two coupled, automated resource-pooling systems that are associated with the insurance systems, and wherein the risk exposure components are connected to the resource-pooling system of the first insurance system by means of a plurality of first payment-transfer modules configured to receive and store payments from the risk exposure components for pooling their risks, and wherein the first resource-pooling system is connected to the second resource-pooling system of the second insurance system by means of a second payment-transfer module configured to receive and store payments from the resource-pooling system of the first insurance system for transferring segmentation layers of the pooled risks of the risk exposure components from the first insurance system to the second insurance system; and in that the switching device comprises a top-down table providing data structures for storing a plurality of variable risk transfer segments that comprise an assigned segment value, and wherein an adaptable risk transfer function is provided by the structure of the plurality of variable risk transfer segments by means of an assembly module; and in that by means of a core engine of the switching device a payment parameter is assigned to each variable risk transfer segment of the top-down table and accumulated to form a total payment sum, and wherein the switching device comprises a capturing device for capturing payment transfer parameters from the first payment-transfer module to the second payment-transfer module, and wherein, upon triggering a transfer of the total payment sum at the second payment-transfer module, the risk exposure of the first insurance system associated with the variable risk transfer segments is transferred to the second insurance system; in that the core engine comprises event-driven triggers that trigger in a data flow pathway of measuring devices, which are associated with the risk exposure components, a signal for the occurrence of a risk event, and wherein, in case of a triggering of an occurrence of a risk event in the data flow pathway, the corresponding variable risk segment is determined within the top-down table by means of the core engine, particularly based on the measured actual loss; and in that, in case of the occurrence of a risk event, an activation signal is generated by means of the switching device based on the determined variable risk segment and the measured actual loss, and wherein the switching device triggers the complementary activation of the first and second resource pooling system by means of the generated activation signal by transferring the activation to the first and/or second resource pooling system to provide risk protection for the risk exposure components. The data structure of the top-down table for storing the variable risk transfer segments can at least, for example, comprise, for each of the stored risk segments, parameters that indicate the size of the variable risk transfer segments and the payment parameters that are assigned to each variable risk transfer segment of the top-down table. Further, the data structure can, e.g., comprise a parameter indicating the accumulated total payment sum that is required by the second resource pooling system from the first resource pooling system for transferring the risk corresponding to the defined risk transfer structure by means of the variable risk transfer segments. A loss that is associated with the risk event and allocated with a pooled risk exposure component can be, e.g., distinctly covered by the first resource pooling system of the first insurance system, such as by means of a transfer of payments from the first resource pooling system to said risk exposure component, and wherein a second transfer of payment from the second resource pooling system to the first resource pooling system is triggered by means of the generated activation signal based on the determined variable risk segment within the top-down table and the measured actual loss of the risk exposure component or the adaptable risk transfer function provided by the assembly module. However, as an embodied variant, it is also possible that the loss, which corresponds to the risk transferred to the second resource pooling system as defined by the corresponding risk segments, is directly covered by the second resource pooling system in that resources are transferred from the second resource pooling system to the concerned risk exposure components. The invention has, inter alia, the advantage that the system provides the technical means for optimizing the coupling and switching of coupled resource pooling systems, thereby providing an effective risk protection of risk exposed components. The inventive system further allows for a more flexible risk transfer structure: this is achieved by a segmentation of the risk transfer function into several layers with different shares, instead of using a purely proportional or non-proportional risk transfer structure. Moreover, the risk structure is easily adaptable by the first and/or second resource pooling system to the technical or otherwise individual conditions and requirements thereof. The segmentation allows an optimized adjustment of the risk transfer structure to a specific requirements of the insurance system; i.e., the primary insurance system’s risk exposure. Due to the better adjustment of risk transfer structure and/or function, the provided solution can offer the advantages of proportional and non-proportional risk transfer. The need for optimized insurance system coupling and switching is a typical technical problem in the field of insurance technology; and the appropriate use of a risk transfer coupling structure is a necessary requirement for an effective and optimized risk management tool for the purpose of managing and mitigating the primary resource pooling’s risk exposure. However, effectiveness depends on the choice of the most optimized risk transfer structure, which is implemented in the context of the switching functionality of the two coupled systems. The invention provides supremely optimized coupling based on the classically prevalent interest of managing the two coupled risk transfer systems, seeking better and more effective operation and strategies based on an appropriate risk transfer structure. The system has, furthermore, the advantage that smaller pooled resources, in contrast to traditional coupled resource pooling systems, are sufficient to allow for a safe operation of the system. In addition, the operational aspects of the system are transparent to operators as well as covered risk units, since payment is transferred in response to individually adaptable risk transfer structures and related to certain definable triggers in the context of the information pathways. Finally, the inventive system provides a new modality for optimizing the underlying risk transfer structure in the service of risk transfer and sharing of two coupled insurance systems by using several layers of different sharing, thereby allowing, for example, for combining the advantages of proportional and non-proportional risk transfer.
“In one embodied variant, the switching device can, e.g., comprise capturing means that capture a transfer of payment assigned to one of the variable risk transfer segments from the first insurance system at the second payment-transfer module, wherein the assigned variable risk transfer segment is activated, and wherein the risk exposure of the first insurance system associated with the assigned variable risk transfer segment is transferred to the second insurance system. This embodiment variant has, inter alia, the advantage that also single risk segments can be activated allowing a distinct and discrete risk transfer from the first to the second resource pooling system.”
There is additional summary information. Please visit full patent to read further.
The claims supplied by the inventors are:
“1. A system comprising: a first automated resource-pooling system including circuitry and linked with a first insurance system; a second automated resource-pooling system including circuitry and linked with a second insurance system, the first and second insurance systems being coupled and autonomously operated; a switching device including circuitry and configured to couple, control and operate the first resource-pooling system and the second resource-pooling system as technical devices; and risk exposure components connected to the first resource-pooling system of the first insurance system by a first payment-transfer device configured to receive and store payments from the risk exposure components for pooling of risks, the risk exposure components being exposed to defined risk events having measurable stages of impact of a measurable loss size on the risk exposure components, wherein the first resource-pooling system is connected to the second resource-pooling system of the second insurance system by a second payment-transfer device configured to receive and store payments from the resource-pooling system of the first insurance system to transfer risks corresponding to pooled risks of the risk exposure components from the first insurance system to the second insurance system, the switching device includes a top-down table providing data structures to store a plurality of variable risk transfer segments in corresponding memories comprising an assigned segment value providing a measure for a segmented part of the pooled risk, wherein, via parts of the segmented risk layers of the pooled risk, an adaptable risk transfer function is provided by an assembly device, wherein the risk transfer function is segmented into plural layers with different shares, the risk transfer function using a non-proportional risk transfer structure, wherein the risk transfer function is generated by the assembly device by interpolating the assigned segment values as support points or interpolation points, and wherein the selection of the parameterization of the risk transfer function performed automatically from a predefined set of the risk transfer functions based on selection criteria in that, only if a risk transfer function is provided by the structure of risk transfer segments providing the risk transfer function via the assembly device, the risk exposure of the first insurance system corresponding to the variable risk transfer segments of the top-down table is transferred to the second insurance system via the risk transfer function, the selection of the risk-transfer functions to establish the parametrization comprise one risk-transfer function based on a proportional and one based on a non-proportional structure among the selectable risk-transfer functions providing the convergence of the optimization to a parametrization, the switching device includes a core engine configured to assign a payment parameter to each variable risk transfer segment of the top-down table and accumulate over all variable risk transfer segments to a total payment sum, the switching device includes a capturing device configured to capture payment transfer parameters from the first payment-transfer device to the second payment-transfer device, and upon triggering a transfer of the total payment sum at the second payment-transfer device, risk exposure of the first insurance system corresponding to the variable risk transfer segments is transferred to the second insurance system based on the adaptable risk transfer function provided by the assigned segment values, the core engine includes event-driven triggers configured to trigger, in a data flow pathway, measuring devices corresponding to the risk exposure components for the occurrence of a risk event of the defined risk events and, in response to a triggering of an occurrence of a predefined risk event or stage of the impact of a predefined risk event in the data flow pathway, the core engine is configured to determine the corresponding variable risk segment within the top-down table based on the measured actual loss, and wherein the risk event triggers are dynamically adjusted based on time-correlated incidence data of one or a plurality of risk events, and upon each triggering of an occurrence of measuring parameters by the measuring devices indicating the risk event by at least one risk event trigger, a total parametric payment is allocated with the triggering, and the total allocated payment is transferrable when the occurrence has been triggered, and in response to the occurrence of a risk event, the switching device is configured to generate an activation signal based on the determined variable risk segment and the measured actual loss, and the switching device is further configured to trigger the complementary activation of the first and second resource-pooling system by the generated activation signal by transferring the activation to the first and/or second resource pooling system to provide risk protection to the risk exposure components, wherein the activation of the first and/or second resource pooling system is based on the adaptable risk transfer function, the assigned segment values providing threshold values for the complementary switching and activation, and wherein via the generated activation signal based on the determined variable risk segment within the top-down table, a corresponding trigger flag is activated by the first and/or the second resource-pooling system, and a parametric transfer of payment is assigned to the corresponding trigger flag and a loss associated with the occurrence of a risk event is distinctly covered based on the respective trigger flag, the selected parametrized risk transfer function being optimized by varying the sets of parameters and interpolating the assigned segment values as support points based on iterations in a batch process using an optimization process.
“2. The system according to claim 1, wherein the switching device is further configured to capture a transfer of payment assigned to one of the variable risk transfer segments from the first insurance system at the second payment-transfer device, the assigned variable risk transfer segment is activated, and the risk exposure of the first insurance system corresponding to the assigned variable risk transfer segment is transferred to the second insurance system.
“3. The system according to claim 1, wherein a loss corresponding to the risk event and allocated to a pooled risk exposure component is covered by the resource pooling system of the first insurance system by a transfer of payments from the first resource-pooling system to the risk exposure component, and a second transfer of payment from the second resource pooling system to the first resource pooling system is triggered by the generated activation signal based on the determined variable risk segment within the top-down table and the measured actual loss of the risk exposure component or the adaptable risk transfer function provided by the assembly device.
“4. The system according to claim 3, wherein the loss corresponding to the risk that is transferred to the second resource pooling system, as defined by the corresponding variable risk transfer segments of the top-down table, is directly covered by the second resource pooling system by the transfer of resources from the second resource pooling system to the concerned risk exposure components by the second payment-transfer device.
“5. The system according to claim 1, wherein the risk transfer function comprises the plurality of stored, variable risk transfer segments, and the first resource pooling system comprises an interface configure to access and adapt the assigned segment value of each of the variable risk transfer segments prior to the transfer of the payment sum from the first resource pooling system to the second resource pooling system.
“6. The system according to claim 1, further comprising: a receipt and preconditioned storage, wherein the assembly device of the switching device is configured to process risk-related component data and provide a likelihood of the risk exposure for one or a plurality of the pooled risk exposure components based on risk-related component data, and the receipt and preconditioned storage stores payments from risk exposure components for the pooling of the risks, the payments being dynamically determined based on total risk and/or the likelihood of the risk exposure of the pooled risk exposure components.
“7. The system according to claim 1, further comprising: a receipt and preconditioned storage, wherein the assembly device of the switching device is configured to process risk-related component data and provide a likelihood of the risk exposure for one or a plurality of the pooled risk exposure components based on risk-related component data, and the receipt and preconditioned storage stores payments from first resource pooling system to the second resource pooling system for the transfer of the risk, the payments being dynamically determined based on total risk and/or the likelihood of the risk exposure of the pooled risk exposure components.
“8. The system according to claim 1, wherein the first resource-pooling system is further configured to dynamically adapt a number of pooled risk exposure components to a range where non-covariant, occurring risks covered by the resource-pooling system affect only a relatively small proportion of the total pooled risk exposure components at any given time.
“9. The system according to claim 1, wherein the second resource-pooling system is further configured to dynamically adapt the pooled risk transfer from first resource pooling system to a range where non-covariant, occurring risks covered by the second resource-pooling system affect only a relatively small proportion of the total pooled risk transfer from the first resource pooling system at any given time.”
There are additional claims. Please visit full patent to read further.
For additional information on this patent, see: Niering, Rita. Adaptive coupling-system based on a flexible risk transfer structure and corresponding method thereof.
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