A causal inference approach to measure price elasticity in Automobile Insurance

• Published in: Expert systems with applications Vol. 41; no. 2; pp. 387 - 396
• Main Authors: Guelman, Leo, Guillén, Montserrat
• Format: Journal Article
• Language: English
• Published: Amsterdam Elsevier Ltd 01.02.2014; Elsevier
• Subjects: Applied sciences; Automotive engineering; Causal inference; Computer science; control theory; systems; Crashworthiness; Elasticity; Exact sciences and technology; Impact strength; Inference; Information systems. Data bases; Insurance; Linear inference, regression; Mathematical models; Mathematics; Memory organisation. Data processing; Operational research and scientific management; Operational research. Management science; Planning. Forecasting; Policies; Price elasticity; Price optimization; Probability and statistics; Sciences and techniques of general use; Software; Statistics; Causal inference; Price elasticity; Insurance; Price optimization; Motor car; Estimate; Transparency; Profitability; Information system; Decision making; Elasticity; Inference; Routing; Context aware; Covariate; History; Modeling; Optimization; Pricing; Database; Tariffication; Causality; Deterministic approach

•We outline a novel approach to estimate price elasticity (PE) in insurance.•We describe the potential pitfalls with the conventional PE estimation approach.•A real-case study using data from a large Canadian insurer is described in detail.•We illustrate how the PE estimates can be used to optimize...