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Prediction of motor insurance claims occurrence as an imbalanced machine learning problem

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  • Sebastian Baran
  • Przemys{l}aw Rola

Abstract

The insurance industry, with its large datasets, is a natural place to use big data solutions. However it must be stressed, that significant number of applications for machine learning in insurance industry, like fraud detection or claim prediction, deals with the problem of machine learning on an imbalanced data set. This is due to the fact that frauds or claims are rare events when compared with the entire population of drivers. The problem of imbalanced learning is often hard to overcome. Therefore, the main goal of this work is to present and apply various methods of dealing with an imbalanced dataset in the context of claim occurrence prediction in car insurance. In addition, the above techniques are used to compare the results of machine learning algorithms in the context of claim occurrence prediction in car insurance. Our study covers the following techniques: logistic-regression, decision tree, random forest, xgBoost, feed-forward network. The problem is the classification one.

Suggested Citation

  • Sebastian Baran & Przemys{l}aw Rola, 2022. "Prediction of motor insurance claims occurrence as an imbalanced machine learning problem," Papers 2204.06109, arXiv.org.
  • Handle: RePEc:arx:papers:2204.06109
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    File URL: http://arxiv.org/pdf/2204.06109
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    References listed on IDEAS

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    1. K A Smith & R J Willis & M Brooks, 2000. "An analysis of customer retention and insurance claim patterns using data mining: a case study," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 51(5), pages 532-541, May.
    2. Mohamed Hanafy & Ruixing Ming, 2021. "Machine Learning Approaches for Auto Insurance Big Data," Risks, MDPI, vol. 9(2), pages 1-23, February.
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    Cited by:

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