Car Insurance

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This is a sample for the car insurance industry that calculates the premium of a car based on Auto and Base premium components. The business rules are for risk classification and calculation of the premium of a car.

Decision Model

The decision graph automatically resolves the dependencies between different logic implementations (i.e. decision table, natural language, etc.)

This image has an empty alt attribute; its file name is Car_Insurance_using_DMN_car_premium.png

Decision Flow

If a Flow is preferred, then the decision requirement diagram above can be presented as a Decision Flow, as shown below:

Business Rules

This is a sample for the car insurance industry that calculates the premium of a car based on Auto and Base premium components. The following business rules are for risk classification and calculation of the premium of a car.

Potential Theft Category definition

  • If the car is a convertible, then the car’s potential theft rating is high.
  • If the car’s price is greater than $45,000, then the car’s potential theft rating is high.
  • If the car model is on the list of “High Theft Probability Auto”, then the car’s potential theft rating is high.
  • If all of the following are true, then the car’s potential theft rating is moderate.
    • car’s price is between $20,000 and $45,000,
    • car model is not on the list of “High Theft Probability Auto”
  • If all of the following are true, then the car’s potential theft rating is low:
    • car’s price is less that $20,000
    • car model is not on the list of “High Theft Probability Auto”

(The “High Theft Probability Auto” list is maintained by Risk Management and provided as input to the eligibility rating process. This list to be retrieved from Database e.g. MS SQL SERVER)

Potential Occupant Injury Category

  • If the car has no airbags, then the car’s potential occupant injury rating is extremely high.
  • If the car only has driver’s side air bags, then the car’s potential occupant injury rating is high.
  • If the car has driver’s side and front passenger air bags, then the car’s potential occupant injury rating is moderate.
  • If the car has driver’s front passenger and side panel air bags, then the car’s potential occupant injury is low.
  • If the car is a convertible and has no roll bar, then the potential occupant injury is extremely high.

Auto Premiums calculation

  • If a compact car, then the base premium is $250.
  • If sedan, then the base premium is $400.
  • If a luxury car, then the base premium is $500.
  • If the car is new, then increase the premium by $400.
  • If the model year is the same as the current year, then this is a new car.
  • If the model year is the same as next year, then the car is new.
  • If the car is less than 5 years old, then increase the premium by $300.
  • If the car is between 5 and 10 years old, then increase the premium by $250.
  • If uninsured motorist coverage is included, then increase the premium by $300
  • If medical coverage is included, then increase the premium by $600.
  • If Potential Occupant Injury is Extremely High, then increase the premium by $1,000.
  • If Potential Occupant Injury is High, then increase the premium by $500.
  • If Potential Theft is High, then increase the premium by $500.

Decision Tables

The above business rules in each decision are formalized as shown in the Decision Tables below:

Potential Theft Rating Decision Table

Car is listed in “High Theft Probability Auto”Car is ConvertiblePriceTheft Rating
FALSE< 20000Low
FALSE[20000; 45000]Moderate
TRUEHigh
TRUEHigh
>= 45000High

Potential Occupancy Injury Rating Decision Table

Driver’s AirbagFront Passenger’s AirbagSide Panel AirbagRoll barConvertibleOccupant Injury Rating
TRUEFALSEFALSEHigh
TRUETRUEFALSEModerate
TRUETRUELow
FALSETRUEExtremelyHigh
ExtremelyHigh

Calculate Premiums Decision Table

Auto Premium
Car TypeIs Car
New?
Car AgeUninsured Motorist
coverage is included
Medical coverage
is included
Potential Occupant
Injury Rate
Potential
Theft Rating
Rule NumberAuto
Premium
R1= 0
CompactR2+= 250
SedanR3+= 400
LuxuryR4+= 500
TRUER5+= 400
FALSE< 5R6+= 300
FALSE[5; 10]R7+= 250
TRUER8+= 300
TRUER9+= 600
ExtremelyHighR10+= 1000
HighR11+= 500
HighR12+= 500
Base Premium
Car TypeRule NumberAuto
Premium
R1= 0
CompactR2+= 250
SedanR3+= 400
LuxuryR4+= 500

Open sample project

The “Car Insurance using DMN” project can be found on the FlexRule Welcome screen once you open FlexRule Designer. If not, all of the sample projects can be found at the default sample project location:

C:\Users\<user name>\Documents\Pliant Framework\FlexRule Designer\<designer version>\Samples\Car.rules.DMN

“Car Flow.xml” is the main model that connects all the sub-models.

Video Description

Database Setup

HighRiskCars

The Potential Theft Category decision needs to access a list of “High Theft Probability Auto” which is maintained in our sample database. You can follow the instructions below to create your own sample database.

Create Table

Create a Database called Car-Insurance and then run the following script against it to create a table called HighRiskCars

USE [Car-Insurance]
GO

CREATE TABLE [dbo].[HighRiskCars](
 [Id] [int] IDENTITY(1,1) NOT NULL,
 [Made] [nvarchar](50) NULL,
 [Model] [nvarchar](50) NULL,
 CONSTRAINT [PK_HighRiskCars] PRIMARY KEY CLUSTERED 
( [Id] ASC ) ON [PRIMARY]
) 
GO

Prepare Data

Once you create the database called Car-Insurance Run the script below to create the required data records:

USE [Car-Insurance]
GO
 
INSERT INTO [dbo].[HighRiskCars] VALUES ('Hyundai','IX35')
INSERT INTO [dbo].[HighRiskCars] VALUES ('BMW','E63')
GO

Thefts

In the newer version of the sample, an IRD is used to build up the HighTheftAutoList rather than reading it directly from the database.

Create Table

Create a Database called Car-Insurance and then run the following script against it to create a table called Thefts

USE [Car-Insurance]
GO

CREATE TABLE [dbo].[Thefts]( 
	[Id] [int] IDENTITY(1,1) NOT NULL,
	[Made] [nvarchar](50) NOT NULL,
	[Model] [nvarchar](50) NOT NULL,
	[Year] [int] NOT NULL,
	[Type] [nvarchar](50) NOT NULL,
	[Location] [nvarchar](50) NOT NULL,
	[Use] [nvarchar](50) NULL
)

GO

Prepare Data

Once you create the database called Car-Insurance Run the script below to create the required data records:

USE [Car-Insurance]
GO
 
INSERT INTO [dbo].[Thefts] VALUES ('Honda','CR-Z',2014,'Sedan','VIC','City')
INSERT INTO [dbo].[Thefts] VALUES ('Hyundai','IX35',2012,'SUV','VIC','Off-road')
INSERT INTO [dbo].[Thefts] VALUES ('Honda','Passport',1995,'Van','NSW','Off-road')
INSERT INTO [dbo].[Thefts] VALUES ('BMW','E63',2016,'Sedan','VIC','City')
INSERT INTO [dbo].[Thefts] VALUES ('Ford','Pickup',2010,'Van','NT','City')
INSERT INTO [dbo].[Thefts] VALUES ('Ford','Ranger',1920,'Wagon','VIC','Off-road')
INSERT INTO [dbo].[Thefts] VALUES ('Ford','Taurus',2000,'Sedan','VIC','City')
INSERT INTO [dbo].[Thefts] VALUES ('Austin','Mini',2000,'Mini','NSW','City')
INSERT INTO [dbo].[Thefts] VALUES ('Hyundai','Santa Fe',2010,'SUV','VIC','City')
INSERT INTO [dbo].[Thefts] VALUES ('Hyundai','Tucson',2010,'SUV','VIC','City')
INSERT INTO [dbo].[Thefts] VALUES ('Ford','Pickup',2010,'Van','NSW','City')
INSERT INTO [dbo].[Thefts] VALUES ('Ford','Ranger',1920,'Wagon','NSW','City')
INSERT INTO [dbo].[Thefts] VALUES ('Ford','Taurus',2000,'Sedan','NSW','Off-road')
INSERT INTO [dbo].[Thefts] VALUES ('Hyundai','Santa Fe',2010,'SUV','NSW','Off-road')
INSERT INTO [dbo].[Thefts] VALUES ('Honda','CRF250l',2014,'Motorcycle','VIC','Off-road')
INSERT INTO [dbo].[Thefts] VALUES ('Aprila','RS250',2010,'Motorcycle','VIC','City')
INSERT INTO [dbo].[Thefts] VALUES ('Kawasaki','KR1',2014,'Motorcycle','VIC','Off-road')
INSERT INTO [dbo].[Thefts] VALUES ('Suzuki','RGV250',2015,'Motorcycle','VIC','City')
INSERT INTO [dbo].[Thefts] VALUES ('Yamaha','TZR250',2015,'Motorcycle','VIC','City')
INSERT INTO [dbo].[Thefts] VALUES ('Suzuki','RMX450Z',2015,'Motorcycle','NSW','Off-road')
GO

Cars

Create Table

Create a Database called Car-Insurance and then run the following script against it to create a table called Cars

USE [Car-Insurance]
GO

CREATE TABLE [dbo].[Cars]( 
	[Id] [int] IDENTITY(1,1) NOT NULL,
	[Made] [nvarchar](50) NOT NULL,
	[Model] [nvarchar](50) NOT NULL,
	[Year] [int] NOT NULL,
	[Type] [nvarchar](50) NOT NULL,
	[Location] [nvarchar](50) NOT NULL,
	[Use] [nvarchar](50) NULL
)

GO

Prepare Data

Once you create the database called Car-Insurance Run the script below to create the required data records:

USE [Car-Insurance]
GO
 
INSERT INTO [dbo].[Cars] VALUES ('Honda','CR-Z',2014,'Sedan','VIC','City')
INSERT INTO [dbo].[Cars] VALUES ('Hyundai','IX35',2012,'SUV','VIC','Off-road')
INSERT INTO [dbo].[Cars] VALUES ('Honda','Passport',1995,'Van','NSW','Off-road')
INSERT INTO [dbo].[Cars] VALUES ('BMW','E63',2016,'Sedan','VIC','City')
INSERT INTO [dbo].[Cars] VALUES ('Ford','Pickup',2010,'Van','NT','City')
INSERT INTO [dbo].[Cars] VALUES ('Ford','Ranger',1920,'Wagon','VIC','Off-road')
INSERT INTO [dbo].[Cars] VALUES ('Ford','Taurus',2000,'Sedan','VIC','City')
INSERT INTO [dbo].[Cars] VALUES ('Austin','Mini',2000,'Mini','NSW','City')
INSERT INTO [dbo].[Cars] VALUES ('Hyundai','Santa Fe',2010,'SUV','VIC','City')
INSERT INTO [dbo].[Cars] VALUES ('Hyundai','Tucson',2010,'SUV','VIC','City')
INSERT INTO [dbo].[Cars] VALUES ('Ford','Pickup',2010,'Van','NSW','City')
INSERT INTO [dbo].[Cars] VALUES ('Ford','Ranger',1920,'Wagon','NSW','City')
INSERT INTO [dbo].[Cars] VALUES ('Ford','Taurus',2000,'Sedan','NSW','Off-road')
INSERT INTO [dbo].[Cars] VALUES ('Hyundai','Santa Fe',2010,'SUV','NSW','Off-road')
INSERT INTO [dbo].[Cars] VALUES ('Honda','CRF250l',2014,'Motorcycle','VIC','Off-road')
INSERT INTO [dbo].[Cars] VALUES ('Aprila','RS250',2010,'Motorcycle','VIC','City')
INSERT INTO [dbo].[Cars] VALUES ('Kawasaki','KR1',2014,'Motorcycle','VIC','Off-road')
INSERT INTO [dbo].[Cars] VALUES ('Suzuki','RGV250',2015,'Motorcycle','VIC','City')
INSERT INTO [dbo].[Cars] VALUES ('Yamaha','TZR250',2015,'Motorcycle','VIC','City')
INSERT INTO [dbo].[Cars] VALUES ('Suzuki','RMX450Z',2015,'Motorcycle','NSW','Off-road')
GO

Project Steps

1. Create the database following the steps above

2. Add a workflow

Once you create a project add a Generic flow to the project. This is the main file.

3. Validate the car

Validate the car using an Input Validation Logic file.

4. Once the car is valid, connect the database and get the required data to calculate the premium value

5. Build High Thefts Probability List

Using an IRD, define the high theft probability depending on the model, city and the country in which the car is being used.

6. Calculate the premium of the insurance

Using a DRD, calculate the car insurance premium

Decision tables were used to define the rules.

Natural Language files were also used when defining the rules.

7. Finally, show the insurance premium and validity of the car

How to run the project

1. Open the file Car Flow.xml

2. Click on the Debug button

3. Select Data Composer to run the project.

4. Select the sample Data file car-for-DRD.dc.json at

C:\Users\<user name>\Documents\Pliant Framework\FlexRule Designer\<designer version>\Samples\Car.rules.DMN\TestData

5. Select the input under Execution Options

6. Click Next Step to go to each step of the flow.

7. When your model is linked to other models and you are trying to navigate into the child model, FlexRule Designer will ask you to confirm that you wish to open and navigate to the child model in detail or just execute it (in which case it does not go to child model details).

Updated on August 1, 2019

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