Predicting Travel Insurance Purchases in an Insurance Firm through Machine Learning Methods after COVID-19
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Abstract
Travel insurance serves as a crucial financial safeguard, offering coverage against unforeseen expenses and losses incurred during travel. With the advent of the proliferation of insurance types and the amplified demand for Covid-related coverage, insurance companies face the imperative task of accurately predicting customers’ likelihood to purchase insurance. This can assist the insurance providers in focusing on the most lucrative clients and boosting sales. By employing advanced machine learning techniques, this study aims to forecast the consumer segments most inclined to acquire travel insurance, allowing targeted strategies to be developed. A comprehensive analysis was carried out on a Kaggle dataset comprising prior clients of a travel insurance firm utilizing the K-Nearest Neighbors (KNN), Decision Tree Classifier (DT), Support Vector Machines (SVM), Naïve Bayes (NB), Logistic Regression (LR), and Random Forest (RF) models. Extensive data cleaning was done before model building. Performance evaluation was then based on accuracy, F1 score, and the Area Under Curve (AUC) with Receiver Operating Characteristics (ROC) curve. Inexplicably, KNN outperformed other models, achieving an accuracy of 0.81, precision of 0.82, recall of 0.82, F1 score of 0.80, and an AUC of 0.78. The findings of this study are a valuable guide for deploying machine learning algorithms in predicting travel insurance purchases, thus empowering insurance companies to target the most lucrative clientele and bolster revenue generation.
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