IDEAS home Printed from https://ideas.repec.org/a/spt/apfiba/v4y2014i5f4_5_4.html
   My bibliography  Save this article

Using Multi-class AdaBoost Tree for Prediction Frequency of Auto Insurance

Author

Listed:
  • Yue Liu
  • Bing-Jie Wang
  • Shao-Gao Lv

Abstract

In this paper, AdaBoost algorithm, a popular and effective prediction method, is applied to predict the prediction of claim frequency of auto insurance, which plays an important part of property insurance companies. Using a real dataset of car insurance, we reduce the frequency prediction problem to be a multi-class problem, in turn we employ the mixed method called multi-class AdaBoost tree (a combination of decision tree with adaptive boosting) as our predictor. By comparing its results with some most popular predictors such as generalized linear models, neural networks, and SVM, we demonstrate that the AdaBoost predictor is more comparable in terms of both prediction ability and interpretability. The later objective is particularly important in business environments. As a result, we arrive at the conclusion that AdaBoost algorithm could be employed as a robust method to predict auto insurance. It is important to practical contribution for insurance company in terms of conclusion explanation and decision making suggestions.

Suggested Citation

  • Yue Liu & Bing-Jie Wang & Shao-Gao Lv, 2014. "Using Multi-class AdaBoost Tree for Prediction Frequency of Auto Insurance," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 4(5), pages 1-4.
  • Handle: RePEc:spt:apfiba:v:4:y:2014:i:5:f:4_5_4
    as

    Download full text from publisher

    File URL: http://www.scienpress.com/Upload/JAFB%2fVol%204_5_4.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hainaut, Donatien & Trufin, Julien & Denuit, Michel, 2021. "Response versus gradient boosting trees, GLMs and neural networks under Tweedie loss and log-link," LIDAM Discussion Papers ISBA 2021012, Université catholique de Louvain, Institute of Statistics, Biostatistics and Actuarial Sciences (ISBA).
    2. Freek Holvoet & Katrien Antonio & Roel Henckaerts, 2023. "Neural networks for insurance pricing with frequency and severity data: a benchmark study from data preprocessing to technical tariff," Papers 2310.12671, arXiv.org, revised Aug 2024.
    3. Christopher Blier-Wong & Hélène Cossette & Luc Lamontagne & Etienne Marceau, 2020. "Machine Learning in P&C Insurance: A Review for Pricing and Reserving," Risks, MDPI, vol. 9(1), pages 1-26, December.

    More about this item

    Statistics

    Access and download statistics

    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:spt:apfiba:v:4:y:2014:i:5:f:4_5_4. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Eleftherios Spyromitros-Xioufis (email available below). General contact details of provider: http://www.scienpress.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.