Insurance claims clustering final (1)

CLUSTERING FOR A INSURANCE

COMPANY

Presented by : Ashish Ranjan

Vaibhav Jain

Objective of the StudyO To Maximize the company’s profit by

segmenting the business according to the coverage products.

O To estimate the claim/coverage ratio for each segment & focus on reducing the claims received & increase the customer coverage base.

Data Variables Explained

O Claim Id O Incident DateO Claim Type : 1. Wind/Hail 2. Water

Damage 3. Fire/Smoke 4.Contamination

5. Theft/VandalismO Policy IdO CoverageO Income(in Thousands)O Town size O Others Variables

Data Snapshot

Data Snapshot

Rapid Miner

K-Means Clustering

Clustering AnalysisAttributes cluster_0 cluster_1 cluster_2 cluster_3 cluster_4

Claim Amount 32.13595628 646.7065116 429.937594 67.60462253 124.0138065

Coverage 136.2993755 1453.186047 588.8721805 402.1022067 1021.9

Income 46.86104606 199.0813953 109.7518797 83.51800232 134.5645161

Members 2562 86 133 861 310

CLAIM/COVERAGE(%)

23.57747874 44.50266455 73.01034219 16.8127957 12.13561077

The claim/coverage % is highest for Cluster 2 i.e. 73% and the members contributing towards the same are

also less. But the average income of the members are significantly high.

Clustering Analysis

cluster 1 2 3 4 5 Grand Total

cluster_0 630 389 589 227 727 2562

cluster_1 10 6 46 19 5 86

cluster_2   86 47 133

cluster_3 228 130 163 70 270 861

cluster_4 95 52 35 15 113 310

Grand Total 963 577 919 378 1115 3952

Types of Claims

Cluster 2 contains only claim types 3 (Fire) & 4 (Contamination). Hence, company should focus on increasing their portfolio bucket by offering other insurance coverage's i.e. 1 (Wind/Hail), 2 (Water

Damage) & 5 (Theft) .

Clustering Analysis

Cluster >2.5 L (1)50TH-

2.499L(2)10TH-

49.99TH(3)2.5TH-

9.999TH(4) <2.5TH(5) Grand Total

cluster_0 668 623 518 435 318 2562

cluster_1 20 21 17 18 10 86

cluster_2 30 28 25 33 17 133

cluster_3 219 208 165 178 91 861

cluster_4 85 70 56 67 32 310

Grand Total 1022 950 781 731 468 3952

RecommendationsO On the basis of analysis, we

recommend to the company to concentrate on clusters where the average income is high & penetration of different types of insurance products are less.

O Overall, by reducing the claim/coverage ratio & increasing customer base, will lead to higher profitability for the company.

THANK YOU