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The End of Free Sharing in the Insurance Industry

The End of Free Sharing in the Insurance Industry. presented by Don Bashline CAS Spring Meeting, Orlando, FL June 18, 2007. Why?. Because we made a lot of mistakes!. Our Patent. Brief personality test Used in auto insurance underwriting Predicts crash-causing behaviors.

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The End of Free Sharing in the Insurance Industry

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  1. The End of Free Sharing in the Insurance Industry presented by Don Bashline CAS Spring Meeting, Orlando, FL June 18, 2007

  2. Why? Because we made a lot of mistakes!

  3. Our Patent Brief personality test Used in auto insurance underwriting Predicts crash-causing behaviors

  4. What Causes Crashes? Most important factor is human behavior – 90% of crashes tied to road user behavior Other underwriting variables correlate with crashes Driver’s actions cause crashes

  5. So What Did We Do Wrong? • We knew nothing about the process • Communication with our legal team was miserable • Existing patents were in our way • Patent Number 4,975,840 DeTore, et. al.

  6. What Can We Do? • Still confident of outcome Retained new advisor Scaled down claims Spent more money

  7. Bashline’s Rules • Learn how the system works 2. Talk to at least two law firms. • What insurance patents have they won? Lost? • Don’t be afraid to be a nuisance • Don’t assume they know what you’re talking about • Who else is out there? • Have a post-patent plan • Don’t wait until the last minute for marketing and licensing plans

  8. Patents and Methods of Innovation • Are non-patentable innovations discouraged? How does this affect nature of advances? • Growth of intangible-asset-only firms. How does this affect innovation? • How do innovators spend their time?

  9. Patents and Insurer Operations • Ease of entry? What if you had to license loss development, underwriting algorithms, classification systems? • DeTore -4,975,840 – underwriting – very broad • IBM – 5,970,464 – classification systems • Transaction costs: Litigating bad patents, trying to do business and avoid infringing or licensing fees.

  10. Patents and Incremental Innovation • Do patents discourage innovation in a system where innovation is incremental? • If not patentable, why bother? • If you improve existing model, can you integrate with existing patents? • Our classification patent • Loss development?

  11. If Davies had patented instead of publishing… • Bornhuetter-Ferguson? • Pinto & Gogol? • Would you need to pay licensing fees to complete your Schedule P? • Where would the CAS be?

  12. Why Does the CAS Exist? • Mission Statement: “..to advance the body of knowledge of actuarial science…” • Vision Statement: “ …to be the pre-eminent resource for education, knowledge, and applied research…”

  13. Are CAS Mission and VisionCompatible with a Patent-BasedModel of Innovation?At best, they are difficult to reconcile…

  14. Thanks for your Attention! • Source: Business Method Patents, Innovation, and Policy, Bronwyn Hall • For live link to paper, e-mail me at: dbashline@gmail.com

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