This chapter presents the development of a classifier tool, which assigns a
category label to items based on their characteristics. The application devel-
oped here is intended to support decision making at insurance companies.
The categories in this case are the risk levels and the items are insured
objects, such as cars.
Focus: this case study exemplifies the mapping between entities of the
problem and objects of the solution, and the use of UML class diagrams.
OO techniques: inclusion and inheritance.
Java features: collections.
Background: the reader is required to know the basic OO concepts and
fundamental Java programming techniques.
One of the main problems in insurance companies is the calculation of
insurance premiums. While for existing items the premiums can be based on
statistics, it is more difficult to define them for new items.
To perform this task, insurance companies must identify the criteria that
they used in the past and apply them to new items. In particular they should
identify how the characteristics of the insured items are related to their risk
Let's consider, for instance, the car accident and theft insurances. We can
assume that the engine power, maximum speed and type of braking system
influence the probability of a car accident. Likewise, the presence and type
of options installed on a car influence the rate of theft for that model.
An insurance company needs a tool that is able to capture the rules and
criteria used in the past to assign the risk category, and apply them to new
items. In particular it wants to be able to predict the risk associated with new
car models and therefore associate them to an insurance premium category.
An important feature of the required system is the ability to represent in
a human-readable way the criteria that are used to classify the items. This is
useful as a form of control over the automatic procedure of assigning the
premium category. It is obviously intended to avoid major mistakes.
The tool will be tested in a car insurance scenario, but it has to be generic
enough to be useful for classifying other kinds of insured items.