Tree-based methods: a useful tool for life insurance

Life insurance faces a number of new challenges. This paper identifies some difficulties with techniques that are widely used to cope with these challenges. As an interesting alternative tree-based methods are suggested and discussed. In particular a hybrid'' approach (using regression trees for a classification situation) is proposed. The main advantage of this approach is its ease of interpretability and its inherent transparency. The method appears to be particularly suitable for the identification of the risk factors in complex situations like disability insurance.