Decision making for contractor insurance deductible using the evolutionary support vector machines inference model

Loss risk during the course of a construction project may be described in terms of frequency (i.e., loss frequency) and severity (i.e., loss severity). This study focused on improving the methodology used to evaluate loss risk. The authors first identified the common attributes of building construction project loss through a review of the literature and interviews with experts. Objective factors adequate to describe loss attributes were selected as model inputs. The loss prediction model was created using the evolutionary support vector machine inference model (ESIM) and deployed to evaluate loss frequency and loss severity. This research combined the deductible efficient frontier curve with the indifference curve of risk versus insurance cost, and developed criteria for optimal insurance deductible decision making. (c) 2010 Elsevier Ltd. All rights reserved.