Cluster analysis application in the compulsoryinsurance of civil-legal liability of the vehicles’ owners
DOI:
https://doi.org/10.26577/JMMCS-2019-2-28Keywords:
cluster analysis, unsupervised machine learning, k-means algorithm, insurance, underwriting analysisAbstract
With an increase in flow of the processed and stored information in insurance organizations in
Kazakhstan, associated with the building of customers’ base, mergers and acquisitions processes
and implementation of the new insurance products; the relevance of the problem of preliminary
information processing for its structuring, allocation of distinctive attributed, generalization
and sorting grows. Without appropriate scientific and methodological approach, data processing
and analysis will be more difficult for insurance organizations and, may require the utilization
of significant informational-computing and financial resources. In the present article as a modern
scientific-research approach to the solution of this problem, it is suggested to apply a procedure of
the cluster analysis by k-means algorithm, which makes it possible to simplify the processing and
further analysis of data set by arranging data in relatively homogeneous groups. Particularly, the
present article describes a process of the cluster analysis application by the k-means algorithm to
the data on losses by a class of Compulsory insurance of civil-legal liability of the vehicles’ owners.
The purpose of the present article is to split the losses by this class of insurance into homogeneous
qualitative groups (clusters) based on frequency and severity of losses and, to interpret acquired
clusters. Results of the k-means algorithm confirm that each acquired cluster has statistically significant
data with similar impact upon losses’ process, which may be employed in the future for
evaluation of losses of the insurance organization. Methodological approaches and results obtained
in this article will, first of all, be interesting to the professional participants of insurance market
of the Republic of Kazakhstan to conduct better underwriting research on the formation of the
efficient structure of the insurance portfolio of Compulsory insurance of civil-legal liability of the
vehicles’ owners in accordance with tariff rates.
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