Problem Statement

To build a classification methodology to determine whether a customer is placing a fraudulent

insurance claim.
Architecture

Data Description
The client will send data in multiple sets of files in batches at a given location. The data has been
extracted from the census bureau.
The data contains the following attributes:
Features:

1. months_as_customer: It denotes the number of months

for which the customer is associated with the
insurance company.
2. age: continuous. It denotes the age of the person.
3. policy_number: The policy number.
4. policy_bind_date: Start date of the policy.
5. policy_state: The state where the policy is
registered.
6. policy_csl-combined single limits. How much of the
bodily injury will be covered from the total
damage.
https://www.berkshireinsuranceservices.com/arecombinedsinglelimitsbet
ter
7. policy_deductable: The amount paid out of pocket by
the policy-holder before an insurance provider will
pay any expenses.
8. policy_annual_premium: The yearly premium for the
policy.
9. umbrella_limit: An umbrella insurance policy is
extra liability insurance coverage that goes beyond
the limits of the insured's homeowners, auto or
watercraft insurance. It provides an additional
layer of security to those who are at risk of being
sued for damages to other people's property or
injuries caused to others in an accident.
10. insured_zip: The zip code where the policy is
registered.
11. insured_sex: It denotes the person's gender.
12. insured_education_level: The highest educational
qualification of the policy-holder.
13. insured_occupation: The occupation of the policy-
holder.
14. insured_hobbies: The hobbies of the policy-holder.
15. insured_relationship: Dependents on the policy-
holder.
16. capital-gain: It denotes the monitory gains by the
person.
17. capital-loss: It denotes the monitory loss by the
person.
18. incident_date: The date when the incident
happened.
19. incident_type: The type of the incident.
20. collision_type: The type of collision that took
place.
21. incident_severity: The severity of the incident.
22. authorities_contacted: Which authority was
contacted.
23. incident_state: The state in which the incident
took place.
24. incident_city: The city in which the incident took
place.
25. incident_location: The street in which the
incident took place.
 26. incident_hour_of_the_day: The time of the day when
the incident took place.
27. property_damage: If any property damage was done.
28. bodily_injuries: Number of bodily injuries.
29. Witnesses: Number of witnesses present.
30. police_report_available: Is the police report
available.
31. total_claim_amount: Total amount claimed by the
customer.
32. injury_claim: Amount claimed for injury
33. property_claim: Amount claimed for property
damage.
34. vehicle_claim: Amount claimed for vehicle damage.
35. auto_make: The manufacturer of the vehicle
36. auto_model: The model of the vehicle.
37. auto_year: The year of manufacture of the vehicle.

Target Label:
Whether the claim is fraudulent or not.
38. fraud_reported: Y or N
Apart from training files, we also require a "schema" file from the client, which contains all the
relevant information about the training files such as:
Name of the files, Length of Date value in FileName, Length of Time value in FileName, Number
of Columns, Name of the Columns, and their datatype.

Data Validation
In this step, we perform different sets of validation on the given set of training files.
1. Name Validation- We validate the name of the files based on the given name in the schema
file. We have created a regex pattern as per the name given in the schema file to use for
validation. After validating the pattern in the name, we check for the length of date in the
file name as well as the length of time in the file name. If all the values are as per
requirement, we move such files to "Good_Data_Folder" else we move such files to
"Bad_Data_Folder."

2. Number of Columns - We validate the number of columns present in the files, and if it
doesn't match with the value given in the schema file, then the file is moved to
"Bad_Data_Folder."
 3. Name of Columns - The name of the columns is validated and should be the same as given
in the schema file. If not, then the file is moved to "Bad_Data_Folder".

4. The datatype of columns - The datatype of columns is given in the schema file. It is
validated when we insert the files into Database. If the datatype is wrong, then the file is
moved to "Bad_Data_Folder".

5. Null values in columns - If any of the columns in a file have all the values as NULL or
missing, we discard such a file and move it to "Bad_Data_Folder".

Data Insertion in Database

1) Database Creation and connection - Create a database with the given name passed. If the
database has already been created, open a connection to the database.
2) Table creation in the database - Table with name - "Good_Data", is created in the
database for inserting the files in the "Good_Data_Folder" based on given column names
and datatype in the schema file. If the table is already present, then the new table is not
created, and new files are inserted in the already present table as we want training to be
done on new as well as old training files.
3) Insertion of files in the table - All the files in the "Good_Data_Folder" are inserted in the
above-created table. If any file has invalid data type in any of the columns, the file is not
loaded in the table and is moved to "Bad_Data_Folder".

Model Training
1) Data Export from Db - The data in a stored database is exported as a CSV file to be used for
model training.
2) Data Preprocessing
a) Drop the columns not required for prediction.
b) For this dataset, the null values were replaced with ‘?’ in the client data. Those ‘?’ have
been replaced with NaN values.
c) Check for null values in the columns. If present, impute the null values using the
categorical imputer.
d) Replace and encode the categorical values with numeric values.
e) Scale the numeric values using the standard scaler.
3) Clustering - KMeans algorithm is used to create clusters in the preprocessed data. The optimum
number of clusters is selected by plotting the elbow plot, and for the dynamic selection of the
number of clusters, we are using "KneeLocator" function. The idea behind clustering is to
implement different algorithms
The Kmeans model is trained over preprocessed data, and the model is saved for further use in
prediction.
4) Model Selection – After the clusters have been created, we find the best model for each cluster.
We are using two algorithms, “SVM” and "XGBoost". For each cluster, both the algorithms are
passed with the best parameters derived from GridSearch. We calculate the AUC scores for both
models and select the model with the best score. Similarly, the model is selected for each cluster.
All the models for every cluster are saved for use in prediction.

Prediction Data Description

The Client will send the data in multiple sets of files in batches at a given location. Data will
contain the annual income of various persons.
Apart from prediction files, we also require a "schema" file from the client, which contains all the
relevant information about the training files such as:
Name of the files, Length of Date value in FileName, Length of Time value in FileName, Number
of Columns, Name of the Columns and their datatype.

Data Validation
In this step, we perform different sets of validation on the given set of training files.
1) Name Validation- We validate the name of the files based on given Name in the schema file. We
have created a regex pattern as per the name given in the schema file, to use for validation. After
validating the pattern in the name, we check for the length of date in the file name as well as the
length of the timestamp in the file name. If all the values are as per requirement, we move such files
to "Good_Data_Folder" else we move such files to "Bad_Data_Folder".
2) Number of Columns - We validate the number of columns present in the files, and if it doesn't
match with the value given in the schema file, then the file is moved to "Bad_Data_Folder".
3) Name of Columns - The name of the columns is validated and should be same as given in the
schema file. If not, then the file is moved to "Bad_Data_Folder".
4) Datatype of columns - The datatype of columns is given in the schema file. This is validated
when we insert the files into Database. If the datatype is incorrect, then the file is moved to
"Bad_Data_Folder".
5) Null values in columns - If any of the columns in a file has all the values as NULL or missing,
we discard such file and move it to "Bad_Data_Folder".

Data Insertion in Database

1) Database Creation and connection - Create a database with the given name passed. If the
database is already created, open the connection to the database.
2) Table creation in the database - Table with name - "Good_Data", is created in the database for
inserting the files in the "Good_Data_Folder" based on given column names and datatype in the
schema file. If the table is already present, then a new table is not created, and new files are inserted
into the already present table as we want training to be done on new as well old training files.
3) Insertion of files in the table - All the files in the "Good_Data_Folder" are inserted in the above-
created table. If any file has invalid data type in any of the columns, the file is not loaded in the
table and is moved to "Bad_Data_Folder".

Prediction
1) Data Export from Db - The data in the stored database is exported as a CSV file to be used for
prediction.
2) Data Preprocessing :
a) Drop the columns not required for prediction.
b) For this dataset, the null values were replaced with ‘?’ in the client data. Those ‘?’ have
been replaced with NaN values.
c) Check for null values in the columns. If present, impute the null values using the
categorical imputer.
d) Replace and encode the categorical values with numeric values.
e) Scale the numeric values using the standard scaler.
3) Clustering - KMeans model created during training is loaded, and clusters for the preprocessed
prediction data is predicted.
4) Prediction - Based on the cluster number, the respective model is loaded and is used to predict
the data for that cluster.
5) Once the prediction is made for all the clusters, the predictions along with the Wafer names are
saved in a CSV file at a given location, and the location is returned to the client.

Deployment
We will be deploying the model to the Pivotal Cloud Foundry platform.
This is a workflow diagram for the prediction of using the trained model.

Now let’s look at the project folder structure:

Steps before cloud deployment:
We need to change our code a bit so that it works unhindered on the cloud, as well.
a) Add a file called ‘Procfile’ inside the ‘reviewScrapper’ folder. This folder contains the
command to run the flask application once deployed on the server:

web: gunicorn app:app

 Here, the keyword ‘web’ specifies that the application is a web application.
And the part ‘app:app’ instructs the program to look for a flask application
called ‘app’ inside the ‘app.py’ file. Gunicorn is a Web Server Gateway
Interface (WSGI) HTTP server for Python.
b) Open a command prompt window and navigate to your ‘reviewScrapper’ folder. Enter
the command ‘pip freeze > requirements.txt’. This command generates the
‘requirements.txt’ file.
requirements.txt helps the Heroku cloud app to install all the dependencies
before starting the webserver.

Deployment to Heroku:

 Go to Heroku.com and create an account and login.

 Click on new(inside the red box) to create a new app.

 Give the name of the app and click ‘create app’.

 After app creation, the ‘deploy’ section has all the deployment steps mentioned.
 We’ll download and install the Heroku CLI from the Heroku website:
https://devcenter.heroku.com/articles/heroku-cli.
 Git also needs to be installed in your computer.
  After installing the Heroku CLI, Open a command prompt window and navigate to
your project folder.
 Type the command ‘heroku login’ to login to your heroku account as shown below:

It opens up a webpage to login to Heroku.

 Before deploying the code to the Heroku cloud, we need to commit the changes to the
local git repository.
 Type the command ‘git init to initialize a local git repository as shown below:

 Enter the command heroku git:remote <remote repo name> to connect local git
repo to the remote repo.
 Enter the command ‘git status’ to see the uncommitted changes

 Enter the command ‘git add .’ to add the uncommitted changes to the local
repository.
 Enter the command ‘git commit -am "make it better" ’ to commit the changes to
the local repository.
 Enter the command ‘git push heroku master’ to push the code to the heroku cloud.

 After deployment, heroku gives you the URL to hit the web API.
Once your application is deployed successfully, enter the command ‘heroku logs --tail’ to see
the logs.