How Machine Learning Can Cut Insurance Premiums

If you think you are overpaying for insurance, you are probably right. That’s not necessarily because companies want to rip you off, but the way they compute risk is approximate, and they want to err on the side of caution. After all, if they lower premiums too much, they could go out of business soon. This is true for all kinds of insurance…. life, health, auto, shipping containers, valuable objects, etc.

Machine Learning can help to estimate this risk better and therefore compute a more ‘fair’ premium. I outline the concept in a simple manner using auto insurance as an example.

[nosh]

informative and valuable insight! Thanks.

[josevalencia]

great insight! Where can l find more about this subject?

[writesantoshb]

Highly educative videos! Hats-off to you Raj Sir

[virajpawar]

We have a machine learning model that classifies a driver in different classes of risk based on their telematics data. I wonder what type of variable the risk is ?

[dipbhattacharya]

As of now, if I have a car and have an insurance with a particular company - the premium is fixed for a month. So we know how much we need to pay per month, we can adjust and calculate the monthly expenses accordingly. In this case as explained - we won't have much idea how much I need to pay per month - rather than it will depend on where I am driving, is it peak hours or an empty road etc. What is the advantage in that case?