Department of Mathematics

Auto-Owners Insurance Company

Proposed Project for the MSU Industrial Math Students

Determining the leading factors of long-term customer retention in the insurance industry.

Project Overview

Insurance companies monitor the length of time their policyholder insurance policies are in force or retained. Insurance customers non-renew their policies for various reasons such as competitors offering a better price, policyholders moving to another state, or poor agency service. One of Auto-Owners goals is to develop a long-term relationship, by providing outstanding service, with the hope that the policyholder will become a lifetime customer. Auto-Owners is interested in learning what current policyholder characteristics are indicative of longer retention rates. By using existing data files, Auto-Owners wants to build a predictive model which projects expected longevity at policy inception.

Project Description

Data files containing insured characteristics such as agency, age, numbers of cars, family structure, etc., will be provided to do initial data mining for relationships and create an expected longevity model. Modeling work will entail determination of significant prediction variables, evaluation of interactions between those variables, and utilization of numerous statistical modeling techniques. Auto-Owners plans to receive regular updates on the project's progress.

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