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Identifying Key Fraud Indicators in the Automobile Insurance Industry Using SQL Server Analysis Services

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  • Benedek Botond

    (Babeş-Bolyai University, Romania)

  • László Ede

    (Babeş-Bolyai University, Romania)

Abstract

Customer segmentation represents a true challenge in the automobile insurance industry, as datasets are large, multidimensional, unbalanced and it also requires a unique price determination based on the risk profile of the customer. Furthermore, the price determination of an insurance policy or the validity of the compensation claim, in most cases must be an instant decision. Therefore, the purpose of this research is to identify an easily usable data mining tool that is capable to identify key automobile insurance fraud indicators, facilitating the segmentation. In addition, the methods used by the tool, should be based primarily on numerical and categorical variables, as there is no well-functioning text mining tool for Central Eastern European languages. Hence, we decided on the SQL Server Analysis Services (SSAS) tool and to compare the performance of the decision tree, neural network and Naïve Bayes methods. The results suggest that decision tree and neural network are more suitable than Naïve Bayes, however the best conclusion can be drawn if we use the decision tree and neural network together.

Suggested Citation

  • Benedek Botond & László Ede, 2019. "Identifying Key Fraud Indicators in the Automobile Insurance Industry Using SQL Server Analysis Services," Studia Universitatis Babeș-Bolyai Oeconomica, Sciendo, vol. 64(2), pages 53-71, August.
    • Handle: RePEc:vrs:subboe:v:64:y:2019:i:2:p:53-71:n:4
    DOI: 10.2478/subboec-2019-0009
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    References listed on IDEAS

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    More about this item

    Keywords

    automobile insurance; insurance fraud; fraud indicators; data mining;
    All these keywords.

    JEL classification:

    • C49 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Other
    • C88 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Other Computer Software
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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