Product and Product Configuration

Insurance products spread risks across a community of policyholders.

For this purpose, products are developed that consist of a calculation and a set of rules for the cover and the settlement of claims. The calculation determines the amount of the premium from the probability of occurrence and the expected amount of loss.

In the simplest case, all policyholders have the same risk and therefore pay the same insurance premium. However, it is easy to find use cases in which the probability of occurrence and the expected amount of loss differ between policyholders. In such cases, a calculation is developed for the product that makes the amount of the premium arithmetically dependent on risk parameters and the possible amount of loss.

The product, consisting of rules and calculation, is the same for all policyholders and is defined a priori. Individual constellations can be calculated without knowing the specific case by defining the risk parameters. The risk parameters form the formal interface that bundles all risk characteristics of the specific case.

Defining this parameter set decouples the abstract calculation of a case, as required for an example calculation in a comparison or for an offer, from a specific application.