# Reducing delivery insurance costs through risk score model for food delivery company

## TL;DR

This paper introduces a new insurance pricing model for food delivery in Latin America that reduces costs by using risk scores based on delivery data.

## Contribution

A novel risk-based pricing model for delivery insurance using machine learning and statistical analysis to reduce costs.

## Key findings

- The new pricing model significantly reduced insurance costs for both the company and insurers.
- Risk classification based on delivery data improved the accuracy of loss probability estimation.
- The model increased insurance accessibility and flexibility for delivery drivers.

## Abstract

In this paper, we propose a novel pricing model for delivery insurance in a food delivery company in Latin America, with the aim of reducing the high costs associated with the premium paid to the insurer. To achieve this goal, a thorough analysis was conducted to estimate the probability of losses based on delivery routes, transportation modes, and delivery drivers’ profiles. A large amount of data was collected and used as a database, and various statistical models and machine learning techniques were employed to construct a comprehensive risk profile and perform risk classification. Based on the risk classification and the estimated probability associated with it, a new pricing model for delivery insurance was developed using advanced mathematical algorithms and machine learning techniques. This new pricing model took into account the pattern of loss occurrence and high and low-risk behaviors, resulting in a significant reduction of insurance costs for both the contracting company and the insurer. The proposed pricing model also allowed for greater flexibility in insurance contracting, making it more accessible and appealing to delivery drivers. The use of estimated loss probabilities and a risk score for the pricing of delivery insurance proved to be a highly effective and efficient alternative for reducing the high costs associated with insurance, while also improving the profitability and competitiveness of the food delivery company in Latin America.