Patent ID: 8145507

Claim:
A method for predicting the profitability of a commercial insurance policy, said method comprising: obtaining policyholder data including premium and loss data from a database; obtaining external data directed to at least one of business level data and household demographics data, the external data having a plurality of external variables to be used in predicting the profitability of the insurance policy; associating the external variables with the policyholder data; creating by a computer one or more derived variables derived from at least one of said external variables and said policyholder data; evaluating by the computer, the associated external variables and at least one of the derived variables against the policyholder data; identifying a set of variables predictive of the insurance policy's profitability based on the evaluation of the associated external variables and at least one of the derived variables against the policyholder data; and creating a score based on an individually weighted multivariate statistical model based on said set of predictive variables, wherein said score is expressed as a sum of products, each of said products being a coefficient multiplied by a variable taken to a power, said coefficients generated mathematically by operating on said set of predictive variables, and wherein said score is a function of said set of predictive variables.