Factor identification for insurance pricing mechanism using data mining and multi criteria decision making

Like the other financial markets, insurance markets need to increase their profit margins if they want to continue their activities. In this article, we examine the factors that can affect the costs of insurance companies and examine the relationships between these factors. We use two approaches to determine the effect of some variables on the charge of insurance companies. Our first approach is to use data analysis. Then we analyzed the relationships between these variables using diagrams. We used statistical graphs to examine the effect of each variable on the cost of insurance companies. Then we determine the relationships between these variables and the trade of these variables on each other. Another approach we use is the Best-Worst method that is one of multi-criteria decision-making techniques. Our expert finds each variable's weight on the charge of insurance companies by using the Best-Worst method. We implemented these two methods on an insurance company's data, and we showed which variable can have the most impact on costs. These results can help insurance companies to determine macro-fiscal policies and pricing. Using these results, insurance companies can divide their customers into several sections and offer the price of their services to each insured separately.

Automated summary

This article examines factors affecting insurance companies' costs using data analysis and diagrams, determining which variables have the most impact on costs. By using these results, insurance companies can establish macro-fiscal policies and pricing strategies to better serve their customers.