Patent ID: 7330820

Claim:
A method of determining a premium for an insurance policy covering a company, comprising: calculating a class action lawsuit frequency distribution for the company; calculating a class action lawsuit severity distribution for the company; calculating a non-class action lawsuit loss distribution based on at least one of a history of non-class action lawsuit losses of the company, a history of non-class action lawsuit losses of a plurality of companies in a common industry sector as the company, a history of non-class action lawsuit losses of a plurality of companies having market capitalizations similar to that of the company, and a market-wide history of non-class action lawsuit losses; selecting a desired return on the insurance policy; calculating a risk load for the company based on the selected return; calculating a benchmark premium for the company based on the calculated distributions and the risk load; inputting a requested market premium for the insurance policy; comparing the requested premium for the insurance policy with the calculated benchmark premium to determine the desirability of the insurance policy; determining the insurance premium for the company responsive to said benchmark premium and the requested market premium; and outputting the insurance premium to an output device.