Health Insurance Predictor: Predicting Customer Interest in Vehicle Insurance

Our client, a health insurance company, is seeking to predict whether their policyholders would also be interested in purchasing vehicle insurance. A policy is an arrangement by which the company guarantees compensation for specific loss, damage, illness or death in exchange for a specific premium paid by the customer. Premiums are periodic payments made by customers to the insurance company in exchange for the guarantee. For example, you may pay a premium of Rs. 5000 per year for health insurance. If, God forbid, you fall ill and require hospitalization in that year, the insurance company will bear the cost of your hospitalization up to a maximum of Rs. 200,000. Now, if you're wondering how the company can bear such high hospitalization costs for just Rs. 5000 premium, that's where the concept of probability comes in. For instance, like you, there may be 100 customers paying a premium of Rs. 5000 per year, but only a few (say 2-3) may get hospitalized in that year and not all. This way, each person shares the risk of others. Similarly, with vehicle insurance, customers need to pay a certain amount of premium to the insurance company every year so that the company provides compensation (known as "sum assured") in case of an accident. Building a model to predict customer interest in vehicle insurance would be of great help to the company as it can plan accordingly.