CLUSTERING FOR A INSURANCE

COMPANY

Presented by : Ashish Ranjan

Vaibhav Jain

Objective of the StudyObjective of the StudyO Maximize the company profits by

segmenting the business according to the markets where the claim/coverage ratio is least.

O To estimate the claim/coverage ratio for each clusters & focus on the income group having highest income with least product penetration.

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 Cluster 2 markets(towns) where the average income is high & penetration of different types of insurance products are less.

O Overall, by reduction in claim/coverage ratio & increased customer base will contribute towards higher profitability for the company.

THANK YOU