IDEAS home Printed from https://ideas.repec.org/a/gam/jdataj/v6y2021i11p116-d679105.html
   My bibliography  Save this article

A Comparative Analysis of Machine Learning Models for the Prediction of Insurance Uptake in Kenya

Author

Listed:
  • Nelson Kemboi Yego

    (African Center of Excellence in Data Science, University of Rwanda, Kigali, Rwanda
    Faculty of Sciences, Department of Mathematics and Computing, Moi University, Eldoret 3900-30100, Kenya)

  • Juma Kasozi

    (African Center of Excellence in Data Science, University of Rwanda, Kigali, Rwanda
    Faculty of Physical Sciences, Department of Mathematics, Makerere University, Kampala 7062-10218, Uganda)

  • Joseph Nkurunziza

    (African Center of Excellence in Data Science, University of Rwanda, Kigali, Rwanda
    School of Economics, University of Rwanda, Kigali, Rwanda)

Abstract

The role of insurance in financial inclusion and economic growth, in general, is immense and is increasingly being recognized. However, low uptake impedes the growth of the sector, hence the need for a model that robustly predicts insurance uptake among potential clients. This study undertook a two phase comparison of machine learning classifiers. Phase I had eight machine learning models compared for their performance in predicting the insurance uptake using 2016 Kenya FinAccessHousehold Survey data. Taking Phase I as a base in Phase II, random forest and XGBoost were compared with four deep learning classifiers using 2019 Kenya FinAccess Household Survey data. The random forest model trained on oversampled data showed the highest F1-score, accuracy, and precision. The area under the receiver operating characteristic curve was furthermore highest for random forest; hence, it could be construed as the most robust model for predicting the insurance uptake. Finally, the most important features in predicting insurance uptake as extracted from the random forest model were income, bank usage, and ability and willingness to support others. Hence, there is a need for a design and distribution of low income based products, and bancassurance could be said to be a plausible channel for the distribution of insurance products.

Suggested Citation

  • Nelson Kemboi Yego & Juma Kasozi & Joseph Nkurunziza, 2021. "A Comparative Analysis of Machine Learning Models for the Prediction of Insurance Uptake in Kenya," Data, MDPI, vol. 6(11), pages 1-17, November.
    • Handle: RePEc:gam:jdataj:v:6:y:2021:i:11:p:116-:d:679105
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2306-5729/6/11/116/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2306-5729/6/11/116/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Kim, Tae-Young & Cho, Sung-Bae, 2019. "Predicting residential energy consumption using CNN-LSTM neural networks," Energy, Elsevier, vol. 182(C), pages 72-81.
    2. Mathias Bärtl & Simone Krummaker, 2020. "Prediction of Claims in Export Credit Finance: A Comparison of Four Machine Learning Techniques," Risks, MDPI, vol. 8(1), pages 1-27, March.
    3. Yves‐Laurent Grize & Wolfram Fischer & Christian Lützelschwab, 2020. "Machine learning applications in nonlife insurance," Applied Stochastic Models in Business and Industry, John Wiley & Sons, vol. 36(4), pages 523-537, July.
    4. D.O. Olayungbo & A.E. Akinlo, 2016. "Insurance penetration and economic growth in Africa: Dynamic effects analysis using Bayesian TVP-VAR approach," Cogent Economics & Finance, Taylor & Francis Journals, vol. 4(1), pages 1150390-115, December.
    5. Bohdan M. Pavlyshenko, 2019. "Machine-Learning Models for Sales Time Series Forecasting," Data, MDPI, vol. 4(1), pages 1-11, January.
    6. Anne-Sophie Krah & Zoran Nikolić & Ralf Korn, 2020. "Least-Squares Monte Carlo for Proxy Modeling in Life Insurance: Neural Networks," Risks, MDPI, vol. 8(4), pages 1-21, November.
    7. Anne-Sophie Krah & Zoran Nikolić & Ralf Korn, 2020. "Machine Learning in Least-Squares Monte Carlo Proxy Modeling of Life Insurance Companies," Risks, MDPI, vol. 8(1), pages 1-79, February.
    8. Jessica Pesantez-Narvaez & Montserrat Guillen & Manuela Alcañiz, 2019. "Predicting Motor Insurance Claims Using Telematics Data—XGBoost versus Logistic Regression," Risks, MDPI, vol. 7(2), pages 1-16, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Giulia Di Nunno & Anton Yurchenko-Tytarenko, 2022. "Sandwiched Volterra Volatility model: Markovian approximations and hedging," Papers 2209.13054, arXiv.org.
    2. Vali Asimit & Ioannis Kyriakou & Jens Perch Nielsen, 2020. "Special Issue “Machine Learning in Insurance”," Risks, MDPI, vol. 8(2), pages 1-2, May.
    3. Abubakar Ahmad Musa & Adamu Hussaini & Weixian Liao & Fan Liang & Wei Yu, 2023. "Deep Neural Networks for Spatial-Temporal Cyber-Physical Systems: A Survey," Future Internet, MDPI, vol. 15(6), pages 1-24, May.
    4. Lan, Puzhe & Han, Dong & Xu, Xiaoyuan & Yan, Zheng & Ren, Xijun & Xia, Shiwei, 2022. "Data-driven state estimation of integrated electric-gas energy system," Energy, Elsevier, vol. 252(C).
    5. Ijaz Ul Haq & Amin Ullah & Samee Ullah Khan & Noman Khan & Mi Young Lee & Seungmin Rho & Sung Wook Baik, 2021. "Sequential Learning-Based Energy Consumption Prediction Model for Residential and Commercial Sectors," Mathematics, MDPI, vol. 9(6), pages 1-17, March.
    6. Lu, Yakai & Tian, Zhe & Zhou, Ruoyu & Liu, Wenjing, 2021. "A general transfer learning-based framework for thermal load prediction in regional energy system," Energy, Elsevier, vol. 217(C).
    7. Sun, Hongchang & Niu, Yanlei & Li, Chengdong & Zhou, Changgeng & Zhai, Wenwen & Chen, Zhe & Wu, Hao & Niu, Lanqiang, 2022. "Energy consumption optimization of building air conditioning system via combining the parallel temporal convolutional neural network and adaptive opposition-learning chimp algorithm," Energy, Elsevier, vol. 259(C).
    8. Luo, X.J. & Oyedele, Lukumon O. & Ajayi, Anuoluwapo O. & Akinade, Olugbenga O. & Owolabi, Hakeem A. & Ahmed, Ashraf, 2020. "Feature extraction and genetic algorithm enhanced adaptive deep neural network for energy consumption prediction in buildings," Renewable and Sustainable Energy Reviews, Elsevier, vol. 131(C).
    9. Namrye Son, 2021. "Comparison of the Deep Learning Performance for Short-Term Power Load Forecasting," Sustainability, MDPI, vol. 13(22), pages 1-25, November.
    10. Zizhen Cheng & Li Wang & Yumeng Yang, 2023. "A Hybrid Feature Pyramid CNN-LSTM Model with Seasonal Inflection Month Correction for Medium- and Long-Term Power Load Forecasting," Energies, MDPI, vol. 16(7), pages 1-18, March.
    11. Hyunsoo Kim & Jiseok Jeong & Changwan Kim, 2022. "Daily Peak-Electricity-Demand Forecasting Based on Residual Long Short-Term Network," Mathematics, MDPI, vol. 10(23), pages 1-17, November.
    12. Johannes Habel & Sascha Alavi & Nicolas Heinitz, 2023. "A theory of predictive sales analytics adoption," AMS Review, Springer;Academy of Marketing Science, vol. 13(1), pages 34-54, June.
    13. Guillaume Guerard & Hugo Pousseur & Ihab Taleb, 2021. "Isolated Areas Consumption Short-Term Forecasting Method," Energies, MDPI, vol. 14(23), pages 1-23, November.
    14. Lu, Renzhi & Bai, Ruichang & Ding, Yuemin & Wei, Min & Jiang, Junhui & Sun, Mingyang & Xiao, Feng & Zhang, Hai-Tao, 2021. "A hybrid deep learning-based online energy management scheme for industrial microgrid," Applied Energy, Elsevier, vol. 304(C).
    15. Byung-Ki Jeon & Eui-Jong Kim, 2021. "LSTM-Based Model Predictive Control for Optimal Temperature Set-Point Planning," Sustainability, MDPI, vol. 13(2), pages 1-14, January.
    16. Li, Ao & Xiao, Fu & Zhang, Chong & Fan, Cheng, 2021. "Attention-based interpretable neural network for building cooling load prediction," Applied Energy, Elsevier, vol. 299(C).
    17. Gu, Xinyu & See, K.W. & Li, Penghua & Shan, Kangheng & Wang, Yunpeng & Zhao, Liang & Lim, Kai Chin & Zhang, Neng, 2023. "A novel state-of-health estimation for the lithium-ion battery using a convolutional neural network and transformer model," Energy, Elsevier, vol. 262(PB).
    18. Mario Tovar & Miguel Robles & Felipe Rashid, 2020. "PV Power Prediction, Using CNN-LSTM Hybrid Neural Network Model. Case of Study: Temixco-Morelos, México," Energies, MDPI, vol. 13(24), pages 1-15, December.
    19. Xuan Bi & Gediminas Adomavicius & William Li & Annie Qu, 2022. "Improving Sales Forecasting Accuracy: A Tensor Factorization Approach with Demand Awareness," INFORMS Journal on Computing, INFORMS, vol. 34(3), pages 1644-1660, May.
    20. Mehmet Balcilar & Rangan Gupta & Chien-Chiang Lee & Godwin Olasehinde-Williams, 2020. "Insurance-growth nexus in Africa," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 45(2), pages 335-360, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jdataj:v:6:y:2021:i:11:p:116-:d:679105. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.