Customer Segmentation for Life Insurance in Iran Using K-means Clustering

Document Type : Research Paper

Authors

1 Insurance Research Centre

2 Department of Mathematics, Faculty of Mathematics, Statistics & Computer Science, Semnan University, Iran

Abstract

Concerning life insurance, penetration rate is one of the main goal of every developed insurance industry. In this sense systematic marketing is a significant component in strategic plan of insurance companies. To achieve the goal insurers need to group their client into different groups in which some common features are shared and people demonstrate a similar pattern. This paper utilizes K-means clustering as an unsupervised learning algorithm in order to divide customers into number of clusters. The clusters are constructed based on two independent variables namely; car and life insurance premiums. Then the descriptive statistics of other determining features are provided with which the most willing group in purchasing life insurance is presented.

Keywords