Chaotic Variational Auto Encoder based One Class Classifier for Insurance Fraud Detection

12/15/2022
by   K. S. N. V. K. Gangadhar, et al.
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Of late, insurance fraud detection has assumed immense significance owing to the huge financial reputational losses fraud entails and the phenomenal success of the fraud detection techniques. Insurance is majorly divided into two categories: (i) Life and (ii) Non-life. Non-life insurance in turn includes health insurance and auto insurance among other things. In either of the categories, the fraud detection techniques should be designed in such a way that they capture as many fraudulent transactions as possible. Owing to the rarity of fraudulent transactions, in this paper, we propose a chaotic variational autoencoder (C-VAE to perform one-class classification (OCC) on genuine transactions. Here, we employed the logistic chaotic map to generate random noise in the latent space. The effectiveness of C-VAE is demonstrated on the health insurance fraud and auto insurance datasets. We considered vanilla Variational Auto Encoder (VAE) as the baseline. It is observed that C-VAE outperformed VAE in both datasets. C-VAE achieved a classification rate of 77.9 Further, the t-test conducted at 1 freedom infers that C-VAE is statistically significant than the VAE.

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