Modeling claims frequency in the Algerian automobile insurance market using machine learning

Abstract

The Algerian automobile insurance market faces significant challenges in pricing insurance policies due to the lack of reliable predictions for insurance losses. In this paper, we introduce a new ratemaking system that leverages advanced data analysis techniques, including Generalized Linear Models and machine learning algorithms like Neural Networks, boosting, and stacking algorithms, to model claims frequency. By analyzing data and statistics of drivers in the Algerian market, this system offers a data-driven solution that helps insurers to better understand their risk exposure and make informed pricing decisions. The proposed system has implications for both insurers and policyholders in terms of fairer and more accurate pricing, which will ultimately benefit the Algerian economy.