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Data Mining Models, Second Edition by David L. Olson

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Chapter 4

Overview of Data Mining Techniques

Data useful to business comes in many forms. For instance, an automobile insurance company, faced with millions of accident claims, realizes that not all claims are legitimate. If they are extremely tough and investigate each claim thoroughly, they will spend more money on investigation than they would pay in claims. They also will find that they are unable to sell new policies. If they are as understanding and trusting as their television ads imply, they will reduce their investigation costs to zero, but will leave themselves vulnerable to fraudulent claims. Insurance firms have developed ways to profile claims, considering many variables, to provide an early indication of cases that probably merit ...

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