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The document analyzes an insurance dataset to build regression models and identify key factors that affect insurance payments and claims. It first cleans and explores the data, then builds multiple linear regression models with payment as the target variable and various factors as predictors. The models show that insured amount, claims, kilometers, and zone have significant effects on payments. Further analysis identifies that zone 4, kilometer group 2, and bonus group 7 tend to have higher claims and payments on average. A regression model is also built with claims as the target, finding that all analyzed predictors significantly impact claims rates.

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Nitika Dhariwal
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75 views

R Codes

The document analyzes an insurance dataset to build regression models and identify key factors that affect insurance payments and claims. It first cleans and explores the data, then builds multiple linear regression models with payment as the target variable and various factors as predictors. The models show that insured amount, claims, kilometers, and zone have significant effects on payments. Further analysis identifies that zone 4, kilometer group 2, and bonus group 7 tend to have higher claims and payments on average. A regression model is also built with claims as the target, finding that all analyzed predictors significantly impact claims rates.

Uploaded by

Nitika Dhariwal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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rm(list=ls(all=T))

mydata=read.csv("Insurance_factor_identification.csv", header=T)
mydata

# data exploration
#the given data is from insurance industry

head(mydata) # give the first 6 records of the data

dim(mydata)

# the data has 2182 no. of observations and 7 variables

summary(mydata) # give the descriptive analysis of the data

str(mydata) #displays the data type of each variable

# In the given data set all the variables are numeric.

#The committee is interested to know each field of the data collected through
descriptive analysis
#to gain basic insights into the data set and to prepare for further analysis.

summary(mydata)

# Splitting the data into Training data set and Testing dataset
#split ratio be 70:30

library(caTools)

# spliting the data : 70% for training and 30% for testing on the basis of dependent
variable

set.seed(125)
sample= sample.split(mydata$Payment,SplitRatio = 0.70)
sample

#Training Data set

train_data=subset(mydata,sample==TRUE);train_data

#Testing data set


test_data= subset(mydata,sample==FALSE);train_data

#Building multiple linear regression model by using train_data

model_1 = lm(Payment ~., data=train_data)


summary(model_1)

#The p-values for the model_1 are in column 4 under coefficients


#Except for Bonus and Make, the p-value for all the independent variables are less
than 0.05
#we can say that, except Bonus and Make , all other independent variables are
significant
#the Insured and Claims are the most significant variable as there p-value is very
small.
#The slope for Kilometres= 4.671e+03, Zone=2.825e+03 , Insured=2.916e+01,
Claims=4.319e+03

cor(mydata[,-c(3,4)])

#Insured and claim show a strong positive correlation with the dependent variable,
#whereas, Kilometer and Zone show a weak negative correlation with Payment.

#Both multiple R-square and adjusted R-square are same for model_1: 0.9947

#since, we have more than one significant variable so we will go for new model
#with significant variables as independent variables

model_1a=lm(Payment~ Kilometres+Zone+Insured+Claims, data=train_data)


summary(model_1a)

#The p-values for the model_1a are in column 4 under coefficients


#The p-value for all the independent variables are less than 0.05
#we can say that all the independent variables are significant
#the Insured and Claims are the most significant variable as there p-value is very
small.
#The slope for Kilometres= 4.625e+03 , Zone=2.782e+03 , Insured=2.948e+01,
Claims=4.310e+03

cor(mydata[,-c(3,4)])

#Insured and claim show a strong positive correlation with the dependent variable,
#whereas, Kilometer and Zone show a weak negative correlation with Payment.

#Both multiple R-square and adjusted R-square are same for model_1: 0.9947

#so model_1a is the final model as all the independent variables are significant i.e
#Kilometres, Zone, Insured and Claims all have significant effect on the Payment.

#To visualize the results for better understanding.


par(mfrow=c(1,2))
plot(mydata$Claims, mydata$Payment, xlab="Number of Claims", ylab="Payments",
main="")

plot(mydata$Insured,mydata$Payment,xlab="The number of insured in policy-years",


ylab="Payments", main="")

#prediction on the on testing data set

predtest = predict(model_1a,test_data)
head(predtest)

#transform into data frame


pred_payment=data.frame(predtest)

#Bind the predicted data set with original data set by cbind function

final_mydata = cbind(test_data,pred_payment); final_mydata

#export the final file with predicted values

write.csv(final_mydata,"InsuranceFinal.csv")

#The insurance company is planning to establish a new branch office, so they are
interested
#to find at what location, kilometer, and bonus level their insured amount, claims,
#and payment get increased.

library(dplyr)

#grouping the data according to Zone and comparing the mean of different zone

grupzone= apply(mydata[,c(5,6,7)], 2, function(x) tapply(x, mydata$Zone, mean))


grupzone
# Zone 4 has the highest number of claims, and thus payment as well.
# Zones 1-4 have more insured years, claims, and payments.

#grouping the data according to Kilometers and comparing the mean of different zone

grupkil= apply(mydata[,c(5,6,7)],2,function(x)tapply(x,mydata$Kilometres,mean))
grupkil

# Kilometer group 2 has the maximum payments.


#Though the insured number of years is lesser than kilometre 1, the claims and
payments are higher for group 2

#grouping the data according to Bonus and comparing the mean of different zone

grupbon=apply(mydata[,c(5,6,7)],2,function(x)tapply(x,mydata$Bonus,mean))
grupbon

Bonus group 7 has the maximum number of claims and Payment

#The committee wants to understand what affects their claim rates so as to decide the
right
#premiums for a certain set of situations. Hence, they need to find whether the insured
#amount, zone, kilometer, bonus, or make affects the claim rates and to what extent.

model_2 = lm(Claims~.,data=mydata)
summary(model_2)

#Dependent variable: claims Independent variable: kilometres, zone, bonus, make, and
insured
#The results provides the intercept and estimated value and this in turn shows
#that all the p values of independent variables, such as kilometres, zone, bonus, make,
and
#insured are highly significant and are making an impact on the claims.

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