Segmentation of customers in the insurance industry using scalable two-stage clustering algorithm (a case study of an insurance company)

Pooya, A.; Fazel Torshizi, D.

doi:10.22056/jir.2020.158409.2413

Document Type : Original Research Paper

Authors

Department of Management, Faculty of Administrative and Economic Sciences, Ferdowsi University of Mashhad, Razavi Khorasan, Iran

https://doi.org/10.22056/jir.2020.158409.2413

Abstract

Objective: Today, in the insurance industry, playing the role of the customer has changed from following the service providers to leading the service providers, therefore, considering the difference in profitability, type of purchase, loyalty, risk, behavioral and demographic dimensions of the customers, in order to create a significant demarcation between them using We take the approach of customer segmentation to increase the competitive power and success of the activists in this field by knowing the characteristics of each of these different groups.
Methodology: In this research, the segmentation of the customers of an insurance company was done using the two-stage clustering method with the scalable cluster analysis algorithm, considering the ability of this method in the simultaneous analysis of continuous and categorical variables. The dominant patterns in customer grouping were identified and then diagnostic analysis was used to validate the clustering.
Findings: According to the effect of the determined indicators, the customers were classified into six clusters. Among the investigated indicators, the variables of discount amount provided, profitability, loss ratio, volume and number of purchased insurance policies played the most important role in separating the clusters. In terms of profitability variable, all clusters are different from each other. In terms of the method of attraction, the cluster of miscalculants is different from the passers-by, and the clairvoyants are different from the clusters of well-calculated ones.
Conclusion: Insurance companies can use the customer segmentation technique based on the criteria proposed in this article and identify their characteristics, identify the position of each group in the profit or loss of the company, predict and draw the behavior pattern of potential and future customers with similar characteristics, as well as determine the target market and Appropriate marketing strategy to increase their competitive power compared to other competitors.

Keywords

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Iranian Journal of Insurance Research

Segmentation of customers in the insurance industry using scalable two-stage clustering algorithm (a case study of an insurance company)

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Volume 9, Issue 2 - Serial Number 32
April 2020
Pages 126-143

Segmentation of customers in the insurance industry using scalable two-stage clustering algorithm (a case study of an insurance company)

References

References

Letters to Editor

Send comment about this article

Volume 9, Issue 2 - Serial Number 32April 2020Pages 126-143

Volume 9, Issue 2 - Serial Number 32
April 2020
Pages 126-143