Patent ID: 8655687

Claim:
A method for predicting the profitability of a commercial insurance policy, said method comprising: obtaining policyholder data including historical premium and loss data; obtaining external data; identifying one or more variables in at least one of the policyholder and external data, creating by a computer one or more derived variables from at least one of said policyholder data, external data and any identified variables; evaluating by the computer, the identified 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 at least one of the identified variables and the derived variables against the policyholder data; and creating an individually weighted multivariate statistical model based on said set of predictive variables, and an associated score, 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 using said score to predict the profitability of an insurance policy.