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Insurance Abstract
The present invention is an insurance premium refund incentive program
for consumers. Under the program, a portion of the premium, known
as a "premium deposit", typically a percentage of the
premium, is received by the insurance company from the insured consumer,
and held on behalf of the insured by the insurance company during
the term of the policy. This "deposit" generates an agreed
rate of return, and is available for refund to the insured if no
claims are made and, optionally, if other prescribed conditions
are met. These other conditions may be designed to encourage behavior
which tends to result in reduced claims, for example, good nutrition
and exercise habits for a health policy. This way, the insurance
company is provided with an enhanced cash flow, and the consumer
is provided with a personalized incentive to engage in behavior
which tends to minimize claims.
Insurance Claims
1. A method for incentivising an insurance policy for consumers,
comprising: a. providing an insurance policy for an insured consumer
in return for a premium payment; b. according to the policy, receiving
at least a portion of the premium in trust on behalf of the insured;
and c. upon expiration of the policy, returning said portion of
the premium received in trust to the insured if no claim has been
made on the policy.
2. The method of claim 1 wherein additional conditions, besides
no claim being made on the policy, must be satisfied before return
of the premium portion received in trust.
3. The method of claim 1 wherein the premium portion received in
trust, plus at least a portion of any interest or other investment
return from the premium portion received in trust, is returned to
the insured.
Insurance Description
[0001] This application claims priority of Provisional Application
Ser. No. 60/603,508, filed Aug. 20, 2004, and entitled "Insurance
Premium Refund Incentive Program," which is hereby incorporated
by reference.
BACKGROUND OF THE INVENTION
[0002] 1. Field of the Invention
[0003] This invention relates generally to insurance policies and
insurance premiums therefor. More specifically, this invention relates
to a premium refund incentive plan for consumers.
[0004] 2. Related Art
[0005] Some state workers' compensation programs have "retrospective
rating" features developed to encourage employers to control
their industrial insurance costs through effective accident prevention
and claim management. Under these plans employers may earn a refund
on a portion of their standard annual premium, or be required to
pay additional premium, depending upon their performance during
the term of the "retrospective rating".
[0006] Also, there are retrospective rating plans for large commercial
insurance accounts. In these plans, the total premium is based on
the insured's actual loss experience during the policy term, subject
to a minimum and maximum premium, with the final premium determined
by a formula. Therefore, the current year's premium is based upon
the current year's losses, although the premium adjustments may
take months or years beyond the current policy's expiration date.
[0007] Still, there is a need for an insurance premium incentive
program for consumers. Also, there is a need for such a premium
incentive program which provides the insurance company with up-front,
paid-in cash, and yet provides an opportunity for the insured to
obtain an immediate cash refund upon the policy's expiration date.
This invention addresses that need.
SUMMARY OF THE INVENTION
[0008] The present invention is an insurance premium refund incentive
program for consumers. Under the program, a portion of the premium,
known as a "premium deposit", typically a percentage of
the premium, is received upon initiation of the policy by the insurance
company from the insured consumer. This "deposit" generates
an agreed rate of return, and is available for refund immediately
upon expiration of the policy to the insured if no claims are made
and, optionally, if other prescribed conditions are met. These other
conditions may be designed to encourage behavior which tends to
result in reduced claims, for example, good nutrition, weight control
and exercise habits for a health policy. This way, the insurance
company is provided with an enhanced cash flow, and the consumer
is provided with a personalized incentive to engage in behavior
which tends to minimize claims.
BRIEF DESCRIPTION OF THE DRAWINGS
[0009] FIG. 1 is a schematic flow diagram for one embodiment of
the insurance premium refund incentive program of the present invention.
DETAILED DESCRIPTION OF THE INVENTION
[0010] According to the present invention, a portion of the premium
is identified as a "premium deposit". Typically, the deposit
is a percentage of the premium, for example, 10%. The deposit, with
interest, is available for refund to the insured. Therefore, the
insurance company has an opportunity to market the program as "cash-back
for good behavior", or "cash-back if no claims made".
Also, the consumer is given an opportunity to "invest"
part of the premium at or near rates available only to large investors
like insurance companies. Also, the insurance company will tend
to develop aware and educated customers who are willing to risk
the deposit amount, and plan and act for the refund. In addition,
the consumer is given an individualized incentive to prevent claims,
and optionally, to engage in other conduct which tends to minimize
claims.
[0011] Referring to the FIG. 1, there is depicted a schematic flow
diagram for one embodiment of the insurance premium refund incentive
program of the present invention. According to the FIG. 1, the insured
makes a payment 10 to the insurance company. The payment may be
a lump sum or distributed in installments. For each payment 10,
there is a portion 12 allocated to cover risk. This portion 12 immediately
goes into possession of the insurance company.
[0012] Also, for each payment 10 there is a portion 14, identified
as a "premium deposit", allocated to the present premium
refund incentive program. This portion may be held separately, for
example, in trust for the insured by the insurance company as trustee.
During the term of the policy, the "premium deposit" 14
earns interest or some other investment return or earnings 16. For
example, the "premium deposit" may earn a fixed rate of
return, as interest. Or, the "premium deposit" may be
invested otherwise on behalf of the insured by the insurance company,
according to their agreement. In any event, the aggregate amount
of capital and investment skill of the insurance company will be
applied on the insured's behalf, and returns better than those normally
obtained by individual investors may be expected to be realized.
In fact, if the insurance company encounters good fortune, then
the rate of return actually obtained on the "premium deposit"
may exceed the agreed amount for return to the insured, and the
"premium deposit" will in that case become an additional
source of revenue for the insurance company.
[0013] If the insured experiences no claims during the policy period,
then, preferably immediately upon expiration of the policy, the
refund 18, including the sum of the "premium deposit"
14 and investment earnings 16, as available for payment to the insured,
provided all other conditions of the parties' insurance agreement
are met. Conveniently, the refund may be applied to the insured's
next policy's first payment. This way, over time, it is conceivable
that the insured may be able to pay the entire policy premium with
the refund, giving the insurance company the opportunity to also
market the program as "earn your way to zero payments for insurance
premiums".
[0014] Conditions of the refund may be agreed to by the parties.
An expected condition is "no claims during the policy period".
Other conditions may be considered, preferably depending upon the
type of insurance policy. Many types of insurance policies may incorporate
the premium refund incentive program of the present invention. For
these different policies, some exemplary conditions are recited
in the following TABLE A: TABLE-US-00001 TABLE A The instant invention
is an incentive program for auto, health and life insurance, for
example, to help encourage good health and safety practices. Auto
insurance would be based on the personal clean driving record. Home
owner insurance would be based on lack of claims on clients home.
Dental insurance would be based on better dental care to keep from
having to have root canal procedures when possible. Malpractice
insurance would be based on doctors being extra thorough in their
operation procedures for refunds. Medical and Life insurance would
be based on improving the clients health and staying healthy to
receive the refunds. An excess premium deposit would be received
by the insurance company; whether it is auto, home, life, health,
dental, or malpractice insurance; from the insured client. This
money would be held in a cash accumulation account, whether refunded
at the end of a 12 month period or kept in the holding account to
help offset the rising costs of insurance. The client would then
receive a refund from the excess premium for good driving behavior,
improved health, dental and life practice and lack of claims on
home or malpractice insurance. Also, the insurance company may then
review the clients policy and possibly lower those accounts that
ave improved or have been consistently improved. HEALTH AND LIFE
Compulsive Eaters Anonymous is free to public. They help you loose
weight, eat correctly, and become emotionally stable. They have
a 12 step program to help you keep track of the foods you eat. Wellness
checkups every 6-12 months. Avoid using the emergency room if client
can wait to visit the doctor. Quit smoking and be Alcohol free with
possibly a test to find out if there is any intake of either substance.
Drug free - by eating natural foods, including vitamins and minerals,
the client can avoid any or most prescription drugs. If the clients
fill out a paper and have it signed by the nutritionist they will
be able to receive their refund at the end of the year. DENTAL Have
frequent teeth cleaning every 6 months to l2 months to reduce the
risk of cavities. Reduce the price of teeth cleaning from the $80.00
price. HOME Have an inspection done on your home before you purchase
or have licensed person bring your home up to code in all areas,
including electrical and plumbing. Put in smoke detectors and fire
extinguishers. Dead bold locks on entry doors to your home. No claims
on home. MALPRACTICE No claims should result in a refund at the
end of the year. AUTO INSURANCE No speeding tickets or personal
accidents. Other drivers causing accidents will not count on clients
record. Glass chips or cracks; which are beyond our control; will
not count toward claims on insurance. If these guidelines are followed
on the above listed areas of insurance programs, the client will
then receive a refund at the end of the year or a 12 month period.
In the event that the insured does lose its refund, the 12 month
contract may start over the next month, after the claim.
[0015] Specifically for health and life insurance policies, some
additional conditions are recited in Table B: TABLE-US-00002 TABLE
B HEALTH AND LIFE INSURANCE REFUND INCENTIVE PROGRAMS An exercise
program (managed, for example, by the health or life insurance health
club company) a. Have a sign-in sheet for client to keep track of
the insured daily or weekly exercise program - signed by qualified
nurse or trainer. b. Physical or wellness checkups every 3 to 6
months. c. Required class on nutrition for eating better to improve
health and weight loss. ** (Can be a once a month class to keep
insured's updated on all health information, and cooking for better
health on a budget.) d. Improve health by not smoking or drinking
excessively. (If the insured wants to quit, have a program available
for client.)
[0016] A possible list of payouts to insureds and the insurance
company is presented in TABLE C: TABLE-US-00003 TABLE C Payouts
Monthly payment 3.5% 6% Premium Extra Amount Interest Paid Earnings
1 100 25 0.07 0.13 2 100 25 0.15 0.25 3 100 25 0.22 0.38 4 100 25
0.29 0.50 5 100 25 0.37 0.63 6 100 25 0.44 0.75 7 100 25 0.51 0.88
8 100 25 0.58 1.00 9 100 25 0.66 1.13 10 100 25 0.73 1.26 11 100
25 0.80 1.38 12 100 25 0.88 1.51 Total Paid 1200 300 5.70 9.79 95%
will receive 285 5.42 Refunds Amount to Refund 290.42 Amount Earned
by Insurance Co. 19.37 95% of Insured will receive 305.70 in refund
Although this invention has been described above with reference
to particular means, materials and embodiments, it is to be understood
that the invention is not limited to these disclosed particulars,
but extends instead to all equivalents within the scope of the following
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